The 'Split Loan' option is normally seen as an agreeable compromise between the upsides and downsides of fixed and variable financing loans. A split home loan permits you to profit from both the security of fixed rate loan and the adaptability of a variable financing rate loan.
These types of loans are especially successful when the business sector is demonstrating harder than normal to anticipate. If you don't know whether financing costs are going to go up or down, a split home loan permits you to hedge your bets a little. If they go up, you’re tied to the lower current interest rate and in case if they go down, you’re in a position to take advantage of those lower rates.
Pros and cons of the Split Loans:Some of the advantages of split loans are:
- Gives some peace of mind for borrowers worried about increase in rates.
- Provides more surety in planning than full variable loans.
- Can make extra installments on variable portion.
- Allows limited additional payments only
- Repayments will rise with rate rises