HSBC borrowers can split their mortgage

HSBC has launched a ’split loan’ mortgage that allows borrowers to fix a proportion of the loan with the remainder on a lifetime tracker rate.

Borrowers can fix either 25%, 50% or 75% of their mortgage, with the rest of the loan tracking the Bank of England base rate at the same rate as the fixed part of the loan.

For customers wanting to fix 25% of their loan up to 70% LTV the initial rate is 2.49%. This goes up to 2.69% for fixing 50% and up to 2.99% for fixing 75% of the loan.

At 80% LTV rates start at 2.99% for fixing 25%, moving to 3.39% to fix 50% and 3.89% for 75%.

The product comes with a £999 booking fee and is available up to a maximum of £500,000.

Aaron Strutt, broker at Trinity Financial Group, says: “The fix and the tracker are the same rate, which is unusual. Other lenders offer split repayment mortgage rates, such as Alliance & Leicester, but they aren’t as competitive as HSBC.”

Andrew Montlake, director at Coreco Group, agrees the rates are eye-catching.

But he says: “Many consumers who go into a HSBC branch might not get any advice on this product, so may walk out with a split that does not suit their circumstances.”

Martijn van der Heijden, head of mortgages at HSBC, says: “It is impossible to predict when interest rates will rise and borrowers are facing the potentially costly dilemma of whether they should fix or take a variable mortgage.

“Our split loan mortgage is an innovative solution for borrowers.”