Split Home Loans
These are simply two or more loans operating together. Splitting loans can be used to increase flexibility and /or reducing interest rate risk. The following is an example of a $200,000 loan split into different components.
$150000 Fixed interest rate and $50000 variable interest rate. Both loans are over the same property and the same term (say 25 years). Split to control the interest rate risk
$150000 Basic home loan (variable) and $50000 Line of Credit (variable). Split to reduce the overall interest rate cost as the basic home loan is usually .50%pa cheaper than the line of credit
$150,000 offset home loan (personal debt for buying the home) $50000. Offset home loan (for buying investments). Split to maximise interest deductibility for tax purposes on the investment component.
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