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 who want to borrow at up to 70% LTV the initial rate is 2.49%. The rate goes up to 2.69% for a 50/50 split between fixing and tracking the mortgage, and up to 2.99% for fixing 75% of the loan.
At a maximum 80% LTV rates start at 2.99% for fixing 25% of the loan, moving to 3.39% to fix 50% and 3.89% for 75%.
The product comes with one £999 booking fee which covers both fixed and tracker parts of the loan, and is available up to a maximum loan size of £500,000.
Borrowers can book the deal without drawing down the funds for up to six months.
Aaron Strutt, broker with Trinity Financial Group, says: “The good thing about this is that the fixed part of the loan and the tracker are at the same rate, which is unusual. There are other lenders that offer split repayment mortgage rates, such as Alliance & Leicester, but the rates aren’t as competitive as the HSBC rates.”
Andrew Montlake, director at Coreco Group, agrees the rates are eye catching.
But he says: “My concern with this is that many people who enter into a branch of HSBC may not get any actual advice on this product, so may walk out with a split that does not really suit their particular circumstances.”