Consolidating split variable loans which were initially one loan

Hi,

A common tactic to take advantage of lower fixed rates (or any other need to fix a loan) whilst retaining the advantage of using savings in an offset account is to split the loan. Fix a portion and keep the remainder variable to offset against savings. At the end of the fixed term, I assume the loan converts to variable and then you are left with two variable loans.

Is it possible to consolidate these loans back into one? Purpose is only to keep things simple with the least number of loan accounts.

I'm interested in what CBA does specifically, but others may be interested in what other banks do.

Thanks

 

Yes, possible and should be done.

 

What's the reason why it should be done @Terry_w

This isn't standard practice with CBA loans and to put back into the one loan would require an application.

 

If the two loans are both principal & interest with matching loan terms, it's fairly easy with most lenders.

It can get a bit pain for if one loan is for 25 years and another is for 30 years. Some lenders require a full application to consolidate the two loans in this type of scenario. I think the CBA falls into this category but not sure.

 

Thanks everyone for the pointers.

My question was under the assumption that the loan properties would be kept the same between fixed and variable.

For example:
Variable IO loan $1m principle, 4 years' IO period, 29 year term
Split 60% IO Fixed ($600k IO for 2 years), 40% IO variable ($400k IO)

2 years pass ending up with $600k and $400k IO variable

Combine back to $1m IO variable for remaining 2 years' IO period, 27 year term.

My simple mind says this would be an easy tick & flick, but seems this is not the case - guess there are implications from the banks point of view which I've missed.

 

Well, I guess i shouldn't have said 'should' but that it would be a good idea to try to consolidate all loans into one loan where the purpose is the same. Otherwise a person would end up with a lot of loans.

But there may be an argument for not consolidating too as what if the borrower wants to fix half of the debt again at some point in the future.