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A home loan is a significant commitment to your finances. Home loans and repayments on those loans are both major financial obligations. A split home loan is an interest rate structure in which one portion of the home loan is fixed and the other portion is variable. A split loan calculator is a great tool for people who want to see how a split home loan will work for them.
Get to know everything about the split loan calculator with this guide.
What is a Split Loan?
A split home loan is one in which you divide your loan into multiple parts, with one portion having a fixed interest rate and the remainder having a variable interest rate.
For instance, you want to split your $500,000 home loan. You decide on a ratio of 60:40 after considering the various types of home loans available and how they might meet your needs. Your home loan would then be divided into two loans: $300,000 with a fixed interest rate and the remaining $200,000 with a variable interest rate.
What is a Split Loan Calculator?
A split loan calculator helps a borrower determine the required repayments and calculates the total rate of interest. This interest rate consists of variable and fixed rate scenarios. Splitting a home loan reduces the amount paid towards the interest rate by separating the rate of interest and the loan amount into fixed and variable interest rates.
How does UM Oceania's Split Loan Calculator work?
Urban Money Oceania is a platform that helps its customers resolve their financial queries. To use the split home loan calculator, one must visit the official website of UM Oceania. The user is supposed to enter the following details in the calculator to get the desired results.
- Loan Amount: The total amount of loan taken by the user
- Loan Period: The tenure of the loan has to be entered
- Repayment Frequency: The user has to choose between the options - monthly, fortnightly or weekly. This consists of the time when the repayment amount is paid to the lender
- Fixed Portion: The percentage or portion of the loan amount that will have a fixed rate of interest is to be entered here
- Variable Interest Rate: The variable rate of interest must be entered
- Fixed Interest Rate: The fixed rate of interest must be entered
- Fixed Period: The tenure of paying the portion with a fixed interest rate must be entered
Upon entering the details in the respective fields mentioned above, the split loan calculator gets to work and presents its user with a graph depicting the loan cycle over the loan tenure. It also displays the fixed repayment amount, variable repayment amount, total monthly repayment amount, total interest payable, and the total interest payable if the loan was at a variable rate only.
How to use the Split Loan Calculator?
To use the split loan calculator available on UM Oceania, follow the below-mentioned steps.
- Visit the UM Oceania official website
- Go to the ‘Home Loan Split Calculator’
- Enter the amount in the fields - loan amount, loan period, repayment frequency, variable interest rate, fixed interest rate, fixed period, and a fixed portion.
- The calculator will display the fixed repayment amount, variable repayment amount, total monthly repayment amount, total interest payable and the total interest payable if the loan was at a variable rate only and also will portray a graph resembling the loan cycle.
Features and Benefits of Split Loan Calculator
The features and benefits of the split loan calculator are given below.
- It is an online tool that can be used multiple times
- The results from the calculator help the user allocate their resources accordingly
- It allows the user to compare and analyze and choose the split that suits them the best
- It is an easy-to-use tool that does not require any degree or course
- It helps to understand the home loan split better
- The online calculator also provides peace of mind and helps manage stress better
How is the Split Loan calculated?
Usually, a home loan is split in a ratio of 50:50 or 60:40 by the borrower. If they use a split loan calculator, they get a better understanding of the different amounts they will have to pay. There is no particular formula to calculate a split loan. The split proportions depend on the borrower. However, they may take aid from the split home loan calculator to calculate different repayment amounts. This will help them figure out which proportion is most attractive and cost-effective.
How accurate is the Split Loan Calculator?
The split loan calculator provides accurate results in very little time. The AI-powered calculator starts calculating as soon as the user inputs its data. The calculator is considered to be error-free and no data has been found questioning its accuracy.
Things you should know About Split Loan Calculator
There are certain things that a user must know about the split loan calculator before using it to accomplish various tasks. The following must be read properly.
- A split loan calculator is an online tool that assists a borrower estimate the repayment amount based on variable and fixed interest rates.
- The calculator considers factors such as the loan amount, tenure, repayment frequency, fixed proportion, fixed tenure, fixed rate, and variable rate.
- A split home loan calculator can help you figure out the optimum split proportion.
- Some calculators also enable you to compare various loan options and interest rates in order to make a more informed decision.
- It's also worth noting that the calculator excludes any additional costs incurred.
- Many online calculators are free to use, but others require a paid subscription or registration to use them.
- Before making any decisions based on the results of the calculator, you should consult your lender to get a more accurate picture of your financial situation and the costs involved.
Frequently Asked Questions
How can I split my loan?
You must approach your lender to split the loan.
Why should I split my home loan?
Splitting a home loan allows you to enjoy the benefits of both fixed and variable interest rates.
Can I switch or split my existing home loan?
Yes, you can switch or split your existing home loan.
Will I be able to pay off my loan faster with a split loan?
Yes, you will be able to pay off your loan faster with a split loan.
Can I get a split loan on an investment loan?
Yes, you can split a loan on an investment loan.