The product, which was launched last week, has 0% interest for the first six months and a discounted rate of 0.7% off the standard variable rate for the next 30 months. Following the discounted period the loan reverts to the SVR. It is available up to 85% LTV between £50,000 and £500,000.
Yorkshire has offered fixed rate products with six-month interest-free periods in its Fresh Start range for several years.
David Heshon, product development manager at Yorkshire, says: “There are two arguments against the Saffron product – first, a variable rate in an environment of rising interest rates does not offer the payment security many people are looking for.
“Second, the mortgage is only available up to 85% LTV and some people targeted by this type of product might struggle to come up with the remaining 15%.
“But we welcome Saffron’s product in terms of increasing awareness of the market niche that we have created.”
Sarah Darling, marketing manager at Saffron, says the product was not brought out to compete with Yorkshire’s range.
She adds: “This was a way of introducing some flexibility into our range. If you need a payment holiday after divorce or separation but have a good payment history it allows that freedom at the beginning.”
Roy New, sole broker, says: “If interest rates continue to rise this product could come into its own. In terms of overall value a base rate tracker would be better but this is an exceptional deal if a client needs time to pay off debts or renovate a property.”