There are several reasons to split a loan in varying accounts and amounts.

The main use of a split loan is to fix the interest rate on part of the loan and leave part of the loan as variable interest. By doing this the customer can be sure of their repayments during an economy where rising interest rates are of concern. The variable portion enables the customer to make extra repayments on the loan hence reducing the principle.

Split loans are also used to break up a loan for accounting purposes such as monies borrowed against your home to start a business. This could be also used for car purchase, so the interest is easily calculated for tax reasons.

Most lenders allow up to 4 splits on a loan how ever there are lenders in the market that allow up to 10. This is a great way for property investors to put all their loans in one easy to manage facility. Lenders who offer this type of product are generally strict on the way this facility is used and won’t approve this type of loan if the facility has any commercial flavour to the transaction.