Choosing the right loan structure.
Your home loan structure affects how flexible your loan is, how easily you can manage money day-to-day, and how efficiently you can reduce interest over time. It also influences how your loan behaves if interest rates change, if your income shifts, or if you plan future goals like renovations or investing.
Choosing the right structure isn’t about picking a product from a list — it’s about aligning your loan to how you naturally manage money. At Lumo, we help clients build structures that keep things simple, functional and adaptable for the long run.
What “loan structure” actually means
A home loan structure refers to how your loan is set up, including:
Number of loan splits
Fixed vs variable rate portions
Whether you have offset access
Whether repayments are principal & interest or interest-only
Whether you use redraw, multiple accounts, or a combination
Your structure shapes the way money flows through your finances and how quickly the loan reduces.
Single loan vs split loans
Single loan
A simple structure where all borrowing sits in one account.
Best for:
First-time buyers
People wanting the simplest setup
Borrowers who don’t need separate buckets for different goals
Split loans
A split loan divides your borrowing into two or more accounts.
For example:
$400,000 variable
$200,000 fixed
$50,000 renovation split
Splits let you customise how each portion behaves.
Why clients choose splits:
To balance fixed-rate certainty with variable-rate flexibility
To make renovations easier to track
To separate personal vs investment loan portions
To direct different repayment strategies to different loan parts
Splits create structure without changing your total loan amount.
Fixed vs variable rates
Fixed rate portion
Repayments stay the same for the fixed term
Good for budgeting and reducing uncertainty
Usually limits extra repayments
Full offset rarely available
Variable rate portion
Repayments can move up or down
Often comes with offset and redraw access
Flexible for extra repayments or paying the loan down faster
Most clients choose a mix to get the best of both worlds.
Offset access and redraw
Offset account
A transaction account linked to your loan.
Balances reduce your interest while keeping your funds instantly accessible.
Redraw facility
Lets you access extra repayments you’ve made into the loan.
Great for longer-term savings and discipline.
Choosing between offset, redraw or both depends on:
How you manage everyday money
Whether you want a cash buffer on hand
Whether you prefer flexibility or structure
We help clients match the feature to their natural saving style.
Interest-only vs principal and interest
Principal & interest (P&I)
Standard for most owner-occupiers
Reduces your loan balance from day one
Usually unlocks the best rates
Interest-only (IO)
Common for investors focused on cashflow
Lower repayments temporarily
Doesn’t reduce the principal during the IO period
Your long-term plans determine which repayment type makes sense.
Loan structures for upgraders, investors and renovators
Different scenarios call for different setups:
Upgraders
Separate splits can make deposit transfers, bridging arrangements or future refinancing cleaner.
Investors
Loan splits help isolate tax-deductible vs non-deductible portions.
Renovators
Creating a dedicated renovation split keeps costs easy to track and prevents mixing personal and improvement spending.
How we help clients choose
Loan structure isn’t one-size-fits-all.
We look at:
How you budget
How regularly you save
Whether you prefer flexibility or boundaries
Future plans (renovations, family changes, investments)
Cashflow comfort
Tax considerations (particularly for investors)
Then we shape the structure around your natural behaviour — not the other way around.
A well-designed structure should feel intuitive and low-maintenance.
Let’s chat.
If you'd like help designing a loan structure that fits your lifestyle and future plans, we can walk through the options clearly and build something that actually works for you. Let’s chat.
This page provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.