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Stuart P.
Stuart P.
Carlton, VIC

Can we split our home loan into 2 accounts... one as principal and interest and the other interest only. Can the interest rate be the same for both as the advice we have received is a little confusing... some say we can and other say the rates will be different?

5 years ago


Hi Stuart,

There are some lenders that will allow you to split your home loan into 2 different products associated with different repayment types (i.e. interest only / principal and interest). If you were comparing like for like products (i.e. both variable rates) the rate for the interest only portion would be higher than that available on a principal and interest repayment.

I trusts this assists and please don't hesitate to get in touch if I can be of further assistance.

Kind regards

Amy Ferguson

Hi Stuart,
Good question, do you mind if I ask why you want to do this and what you hope to achieve as the end result?
By better understanding your desired outcome, I might be better able to point you in the right direction...


Hi Graham - we want interest only for one split as it's an investment. The principal and interest split isn't so we want to pay it off as quick as possible. We still would like the interest rate to be the same in both accounts.



Hi Stuart,
I agree with Graham, it is important to be using an interest only product for the right reasons. Having read your further comment, there is a really competitive loan product that will give you owner occupied rates on both properties.
With that product the interest only portion is 0.15% higher giving you 3.89% and 4.04% on your two loans subject to assessment and qualifying criteria.
Happy to help if you are interested

Hi Stuart,

All lenders these days have increased their Interest Only Rates at the urging of the regulator APRA to try to put the brakes on Investment lending. APRA guidelines now suggest that Lenders should keep the Interest Only loans to no more than 30% of their total lending so different lenders will tweak their offerings differently depending on the situation with the total loan book.

I'm not sure how long you have had your current loan but it should have been explained to you at the start the reasons why you couldn't have the same rate. Some lenders have smaller differentials that others. The best you will get is around 0.15% between the 2 rates.

I haven’t put my contact details in the email because the will be redacted. If you want to explore your options, please search for me through the "Industry experts" tab and click on my business name under "Name of Business" and all my contact details are there. I would be happy to provide you with some quotes.


Michael Budge
Bayside Finance Group

Hi Shaun

While it is true that major lenders and ADIs (banks) have, thanks to the APRA ruling got a premium for IO products (vs PI) this is not the case with all lenders. I can provide at least 2 examples of lenders where these are the same, both you would have heard of.

If you want to run some numbers for yourself you can do this via our platform (unohomeloans.com.au) - this front end is powered by the same technology our advisers use, you see what we see. If you want any advice past that you can reach out to us via the platform. We're available till 10pm weekdays, 6pm on the weekends

Hi Shaun,

Completely understand your reasoning for wanting the two different repayment types, as it makes sense for accounting purposes & management of the loan.

First priority always to pay off non-deductable debt i.e the home loan.

Having said that as Vincent pointed out, there are some lenders out there that will offer the same rates on both. What I would suggest however if it is possible is to perhaps shift the investment portion over to the property that it relates to.

Happy to discuss further.

Kind Regards
Rebecca A Mitchell
Awesome Lending Solutions

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