When we hired our first mortgage brokers and opened The Mortgage Gallery Rockingham, home loans were easy. Mortgages were either written with a fixed rate or a variable rate. Lately, though, Australians are looking into splitting their loans between fixed and variable rates to mitigate the consequences of both.
In 2012, the number of Australians looking to split their home loans between fixed and variable almost doubled from those in 2011. At the present time, one in four Australians are looking into the possibility of splitting their home loan between variable and fixed terms.
The current fixed rate at virtually all of the major banks is below 5.50%, while variable rates are checking in at 5.7%. According to officers in the lending industry, such as Clive van Horen, general manager of home loans for Commonwealth Bank, there is a growing trend for borrowers to “hedge their bets” by putting part of their loan into fixed rates while they are low, while keeping part of the loan at a variable rate in case variable rates drop in the future.
According to finance and home loan experts, the fixed portion of a loan serves as a “safety net,” while the variable portion gives them an opportunity to pay off their loan faster when it is convenient to do so.
Borrowers feel that they can get the best of both worlds by splitting their loans, with consistency from the fixed portion and an opportunity to profit from the variable portion.
We don’t think that everyone should run out and apply for a split loan today but we definitely think that it is worth looking at to see if it would be to your advantage. Every home loan and every homeowner represent a different situation, with different resources and different needs. A split loan may be appropriate for you but it may not for others.
The best way to find out if a split loan is right for you is to come in and talk to our expert mortgage brokers, who have plenty of experience in the Rockingham, Cockburn and Kwinana markets. Call us at (08) 9527 1800 today; let’s see if a split mortgage is the right mortgage for you.