Split Loan Calculator Australia — Fixed vs Variable with Offset

A split loan divides your home loan into two (or more) portions, each on its own rate type. The most common configuration is part fixed (rate certainty), part variable (offset + unlimited extras). This calculator compares the total cost of any split against pure fixed and pure variable equivalents.

How a split loan works

You take out a single home loan, but the lender administratively splits it into two accounts at settlement. Each account runs independently — its own rate, its own statement, its own rules.

The fixed portion locks the interest rate for a defined period (1, 2, 3, or 5 years are most common). During that period, your repayment on the fixed side is unaffected by RBA rate moves or the lender's own variable rate changes. Most fixed loans cap extra repayments at $10,000–$30,000 over the entire fixed period and offer limited or no offset.

The variable portion runs at the lender's standard or discounted variable rate. The rate moves with the lender's pricing decisions (usually correlated with RBA cash rate movements). It permits unlimited extra repayments, redraw, and full offset benefit on most products.

The split ratio is your choice — 50/50, 60/40, 80/20, whatever your lender permits. Some lenders cap the minimum split size (often $50k per portion).

What problem the split solves

Pure fixed and pure variable each have a fundamental weakness:

Loan type	Rate certainty	Offset benefit	Extra repayments	Break cost risk
Pure fixed	Yes (during period)	Usually no	Capped at $10–30k	Yes — significant
Pure variable	No (rate floats)	Yes	Unlimited	No
Split (mixed)	Partial	Partial	Partial unlimited, partial capped	Partial

A split lets you protect part of the balance against rising rates while keeping the rest liquid for offset, extras, or refinance. It's a hedge — not the absolute lowest cost in any single rate scenario, but the most resilient across the range of scenarios.

Picking the right ratio

The right split is the one where the variable portion comfortably accommodates your expected offset balance plus any planned extra repayments — no more, no less.

Worked example: $700,000 loan. You expect $80,000 average offset balance and $200/month extra repayments.

• Variable portion needs to be at minimum: $80,000 (offset) + capacity for $200/month × 12 × 5 years = ~$92,000. Round up to $100,000 = ~14% variable.
• Practical floor: most splits don't go below 30% on either side, both for cost reasons and to maintain meaningful flexibility.
• Realistic split: 70% fixed ($490k), 30% variable ($210k) — fixed gives rate certainty on most of the balance; variable comfortably absorbs the offset and extras with room to spare.

If you instead expect a $200k offset balance over time (perhaps a business owner with significant cashflow buffers), invert it: 30% fixed, 70% variable.

The mistake most borrowers make is setting the variable portion too small. If your offset balance grows to $50,000 but the variable portion is only $40,000, the offset stops adding benefit beyond the variable balance — extra cash sits ineffective.

Worked rate comparison

$600,000 loan, 30-year term. Fixed rate (3-year): 5.79%. Variable rate: 6.10%. Average offset balance: $40,000.

Structure	Year 1–3 monthly	Year 1–3 interest paid	Notes
100% fixed	$3,514	~$103,000	No offset benefit, $30k extras cap
100% variable	$3,635 (less ~$200/mo offset benefit)	~$103,000	Full offset, full extras
60/40 split	$3,587 (less offset benefit on variable)	~$103,500	Balanced
70/30 split	$3,539 (less offset benefit on variable)	~$103,000	Fixed-heavy with offset on variable

The total cost across structures is closer than people expect during the fixed period. The bigger lever is what happens at fixed-period rollover and how aggressively you use the variable side's flexibility.

What happens at the fixed-period end

The fixed portion automatically rolls to the lender's "revert rate" — usually the standard variable rate, which is often 1–2% above what you were actually paying on the fixed side. Most lenders don't proactively contact you. If you don't act, you'll quietly start paying more.

Three options at rollover:

1. Re-fix at the lender's current fixed rate. Quickest. Check the rate is competitive — banks often quote a worse rate to existing customers than to new ones.
2. Let it convert to variable. Lowest commitment, but you're now on the lender's standard variable rate, which is typically not the headline rate they advertise to new customers. You may need to ask for a rate review.
3. Refinance the whole loan to a new lender. Use the rollover as a forcing function to shop the market. The variable portion can usually be discharged with no break cost; the just-rolled-over portion is now also variable, no break cost there either.

Set a calendar reminder for 60 days before the fixed period ends. Banks rely on inertia — break it deliberately.

When a split doesn't make sense

• Loan term is short (selling within 1–2 years). Break-cost risk on the fixed side.
• You won't make extras or hold offset. A pure variable rate without the split structure may price marginally lower with no fewer features for your use.
• Fixed and variable rates are nearly identical. If the lender's fixed and variable rates are within 0.10% of each other, the split adds complexity without much benefit. Pick one.
• You want one fixed product locked at a great rate. If you've negotiated a particularly low fixed rate and have no plans for extras or offset, splitting just gives a portion at a worse variable rate.

For pure offset modelling, see the Offset Account Calculator. For the extra-repayment math on the variable side, the Extra Repayment Calculator. For comparing the total cost of split vs fixed vs variable side-by-side, the Loan Comparison Calculator.