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What is a split loan, and how do people use it?
Bayley Clarke · Mortgage broker on the road · Last checked 1 November 2026 · 4 min read
The short answer
A split loan is pretty much just your home loan in parts instead of one whole. You can have two splits, three, four, or ten if you really want, though that's going to get very confusing in your banking app.
Splitting just gives you flexibility in how the loan is set up. The two reasons I see most are hedging your bets on interest rates, and keeping money borrowed for different purposes in its own split, so each part can be run and paid off the way that suits it.
The two minute version, filmed from the driver's seat. The rest of this page is the detail underneath it.
Reason one: hedging your bets on rates
Some people like the idea of being able to hedge their bets from an interest rate perspective. So they'll fix 50% of their loan as one split and keep the rest variable as the other. That way, if rates change, half the loan moves and the other half stays put, so you smooth out the swings in your repayments.
It doesn't have to be half and half either. Some people fix more because they want certainty on the bulk of their repayment, and some fix less because they want the flexibility. The variable side is generally where your offset account and extra repayments work best, because fixed splits often limit how much extra you can pay and can come with break costs if you get out early.
Reason two: different purposes, different splits
The other reason that pops up all the time is when different parts of your home loan are for different things. Say you bought a house with a home loan, and later you want to buy a car, but you don't want the car just lumped in with the home loan. You can give it its own split so you know exactly what's being repaid.
A car isn't a home, and it isn't going to last you 30 years, so you'd want to pay that split off a lot sooner, say over five years. Keeping it separate means you can set a shorter term or bigger repayments on that part, rather than paying off your car over three decades. Whether a shorter term on a split is available depends on the lender.
Investment money in its own split
Say you want to pull money out of your home to buy an investment property. We'd do another split for that cash out, because the investment related part is generally a deductible portion, and your home loan is a non-deductible portion. Keeping them in separate splits keeps the line between the two clean.
If it's all mixed into one loan, working out which part of the interest relates to the investment gets messy fast, and that's the last thing you want at tax time. Deductibility follows what the money was used for, so have a chat to your accountant about how it applies to you, and we set the splits up to match from day one.
The honest bit: more splits isn't better
There's no one right way to skin the cat. It's about keeping it simple, stupid, looking at your situation and seeing whether a split makes sense for you at all. Plenty of people are better off with one loan and an offset, and every extra split is another balance to keep track of.
That's part of my job as your mortgage broker. We sit down, I figure out what your world looks like by putting myself in your shoes, and at the end of it I invoice the bank for the work, not you.
Wondering whether splitting your loan makes sense for you?
A 30 minute call. We look at your loan, what you're planning next and whether fixing part, splitting off a purpose or keeping it as one loan suits you best.
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Next question
Should I go fixed or variable?There is no universally right answer. Fixing buys certainty of repayment, variable buys flexibility.
Related answers
The full guide: Home loan jargon, translated Should I combine my home loans into one, or keep them separate? What does cash out mean, and what will the banks accept as a reason for my cash out? Will I get hit with break fees if I break my fixed rate early? What is an offset account?Not your question? Book a call and ask it, or call 0437 189 939.