Strategy
Loan structure 101: splits, offsets and why it matters
6 min read · By Daniel Lagden · 20 January 2026
The short version
- Structure, not just rate, drives what you pay over a loan's life.
- Offsets reduce interest while keeping cash accessible.
- Splits separate fixed/variable and deductible/non-deductible debt.
- Structure should anticipate your next 3–5 years, not just today.
The single biggest predictor of how much you'll pay over a loan's life isn't the rate. It's the structure. Same rate, same lender, same amount; different structure can mean five or six figures over thirty years.
Offset accounts
A transaction account linked to your loan. Every dollar in offset reduces the loan balance interest is calculated on, while remaining fully accessible. $50k in offset on a $500k loan = you only pay interest on $450k. Equivalent to earning your loan rate, tax-free, on the offset balance. This is a general comparison only and is not tax advice. Speak with your accountant about your personal position.
Splits
Breaking one loan into two or more sub-accounts. Useful for: (a) part fixed, part variable (certainty plus flexibility), (b) separating tax-deductible debt from non-deductible debt (critical for investors), (c) keeping a clean line between owner-occupier and investment portions when you rent out a former home. This is a general comparison only and is not tax advice. Speak with your accountant about your personal position.
Repayment type
Principal & Interest pays down the balance and saves long-term interest. Interest-Only keeps repayments lower and is the right tool for some investors and people parking cash in offset rather than reducing balance. Tax treatment depends on your circumstances. Speak with your accountant about your personal position.
Loan term
Most loans default to 30 years. Refinancing usually resets the clock; make that decision deliberately, not by default. Sometimes a 25-year refinance at the same rate beats a 30-year refinance at 0.2% less.
The structural call that matters most for you depends on what you're doing in the next 3–5 years: buying another property, renting your home out, having kids, going self-employed. Loan structure should anticipate the next move, not just optimise for today.
Run the numbers
Frequently asked questions
What is a split loan?
A split loan divides your borrowing into two or more portions, commonly one fixed and one variable. It lets you lock in certainty on part of the loan while keeping flexibility (extra repayments, offset) on the rest.
Does loan structure really matter more than the rate?
Over a 30-year loan, structure decisions, offset use, repayment type, splits and term, frequently outweigh small rate differences. A well-structured loan at a slightly higher rate can beat a cheaper loan that's structured poorly.
