HSBC has unveiled a Split Loan Mortgage which allows customers to fix a proportion of their mortgage, while the rest of the loan remains variable, tracking the Bank of England base rate for the life of the loan.
The banking giant says the loan is designed to appeal to customers facing the dilemma of whether to keep tracking to preserve the flexibility to make overpayments, or benefit from the security of locking into the historically low fixed mortgage rates.
Customers can choose to fix 25%, 50% or 75% of their loan, with the remaining percentage on a lifetime tracker, at exactly the same rate as the fixed proportion. The actual interest rate will depend on the proportion of the mortgage which is fixed and the LTV of the mortgage. The mortgage deal has only one booking fee of £999 which covers the fixed and tracker loans and is available to customers looking to borrow up to £500,000.
Martijn van der Heijden, HSBC’s head of mortgages, said: “It is impossible to predict exactly when interest rates will start to rise and borrowers are facing the potentially costly dilemma of whether they should fix or take advantage of the historically low rates with a variable mortgage. Our consumer research shows many households on trackers or standard variable rates feel they should lock in some of the benefit of the low base rate but are not sure how or when. HSBC’s new Split Loan Mortgage is an innovative solution for borrowers as they can benefit from a super low rate but also the peace of mind from their fixed portion.””
