Newcastle has announced a mix and match mortgage offering borrowers the security of a fixed rate and the flexibility of a variable offset combined.
Borrowers can have part of their mortgage as a variable offset mortgage, which means they can use any savings to reduce, or offset, the interest paid on it. As this portion of the loan is based on a variable rate, they could also benefit if interest rates fall. Newcastle's offset mortgage has an initial rate of its SVR less 2.2% (currently 4.09%) for the first six months, reverting to SVR less 1.5% for the rest of the term.
At the same time, borrowers can choose to hold a separate part of the mortgage in a highly competitive five-year fix at 5.40%, which offers security against any future interest rate rises.
The mix and match mortgage gives the best of both worlds, allowing the customer to decide how much of their mortgage they would like offset by their savings, and how much they would prefer at a guaranteed rate.
The allocation between the two types of mortgage is chosen at the start of mortgage and is entirely flexible.
Robert Hollinshead, chief executive of Newcastle, says: “We believe this is a unique product that combines highly competitive rates of two completely different mortgages. It is a flexible approach to changing market conditions. We have found that while people are keen to avoid rate rises, they can also be reluctant to commit themselves entirely to a fixed rate for the long-term. We have therefore tailored this mortgage to meet their needs, offering them the freedom to decide the proportion of fixed mortgage and offset that they require.”