Split Home Loans - What are they? How do they work? [Should I split my loan?!]

00:00 Split Home Loans
00:15 What does it mean to have a split home loan?
01:10 Is a split home loan a good option?
02:24 Setting up the correct home loan split?
04:15 Setting up the right split as a home owner?
07:10 A warning about split home loans
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Mortgage Broker Brisbane - Hunter Galloway
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[@MortgageBrokerAustralia]

Get the 5 Best things I've found in the property and finance world every week - for free. hubs.ly/H0qHChB0

[@asaaus8237]

Absolutely spot on subject. Thank you.

[@MortgageBrokerAustralia]

You're very welcome 😊

[@jnc3696]

All your videos are great. Massive help for us FHB's learning how it all works.

[@MortgageBrokerAustralia]

Glad to help!

[@adamcottrill9749]

Good video ! Could you do one on a split contract loan ie land up front to the developer and then progress payments to the builder over the build please until completion , I believe these type of contract setup for new homes are becoming more common? Thanks so much

[@MortgageBrokerAustralia]

Hi Adam Cottrill, yes it's very common. We actually recommend to both buy the land and build at the same time. We have a video explaining why this is important and can be found below 😊 Thanks for watching! 5 Reasons why you SHOULD NOT buy land then build later in 2021 kzbin.info/www/bejne/f6bCaGiHnKtmgKc

[@shuailuo]

hi Joshua, nice video for the explanation. a question about refinancing on this split loan: From my memory, if the loan is split into a variable loan and a fixed loan, say for 3 years fixed, then during this 3 years of fixed term, it will be difficult to refinance again, or change the variable/fixed ratio of the loan. is this true?

[@MortgageBrokerAustralia]

Thanks for watching Avocado Wealth Buyers Agent Yes, you're spot on there! Whilst in the fixed period, the bank will charge a break fee for leaving the Fixed Term earlier than 3 Years. The fee could be significant (thousands) or could be reasonable (couple hundred). So whilst on a fixed it may, or may not be worth breaking and would really depend on this break fee and benefits in switching. 😊

[@shuailuo]

@@MortgageBrokerAustralia Thanks so much for the clarification! that helps a lot :)

[@aswethinkweiz2008]

Hi i have a split loan.. where should I put extra payments if I want to save money? One is 2.69 and one is 6.64..

[@MortgageBrokerAustralia]

Hi aswethinkweiz. If you have a split loan with different interest rates, and one of them has a fixed rate, it's important to consider the limitations on extra repayments with the fixed loan. Understand the terms of your fixed-rate loan: Review the terms and conditions of your fixed-rate loan to determine if there are any restrictions on making extra repayments. Fixed-rate loans often have limits on the amount or frequency of additional payments you can make without incurring penalties. Make sure you are aware of these limitations before deciding where to put your extra payments. Prioritise the higher rate loan: Assuming there are no restrictions on extra repayments for your fixed-rate loan, focus on making extra payments towards the loan with the higher interest rate (6.64%). By paying off the higher interest loan first, you reduce the overall interest you'll pay. Make minimum payments on the lower rate loan: While you prioritise the higher rate loan, continue making the minimum required payments on the lower loan (2.69%). Be aware extra repayments on fixed-rate loans may be limited, it's essential to full fill your repayment obligations and avoid penalties. Reassess when the fixed-rate period ends: If the fixed-rate loan has a specific term, such as a fixed period of five years, reassess your strategy when that period ends. At that point, the fixed rate might convert to a variable rate or provide you with an opportunity to refinance. Evaluate the interest rates, terms, and any restrictions on extra repayments at that time to determine the best course of action. Remember, it's crucial to carefully review the terms and conditions of your loans, especially the fixed-rate loan, to ensure you understand any limitations on extra repayments. Consider seeking advice from a financial professional or contacting your loan provider for personalised guidance based on your specific loan agreements.

[@aswethinkweiz2008]

@@MortgageBrokerAustralia thank you so much for the reply. It makes sense to me now..We are new homeowners and have very little knowledge. But thank you and will continue to support your YT channel.