HSBC Split Loan Mortgage Part Fixed Part Tracker

by Peter Jacobs

A new mortgage deal launched on April 26th from HSBC bank combines the best of both worlds with this innovative new offer.During the past 20 years when the mortgage market increased in competition and interest rates moved around more than they have done in the past 2 years it was often difficult to decide what to do.

Should you fix your mortgage believing that rates would increase so you would benefit from your foresight or should you choose a tracker because although interest rates were low they could reduce.

Well now you can get the best of both worlds with a new HSBC split loan mortgage which allows you to bring both a fixed and variable element into your loan.

Interest rates can only increase

With the Bank of England base rate continuing at a record low of 0.5% the only way in which this can move over the coming years is upwards. Current fixed rate deals are still quite low and although many banks standard variable rates are between 3.0% and 4.0% these mortgage rates are still at historic lows.

The split loan mortgage product offer

With the HBSC bank split loan mortgage you can choose to fix 25% or 50% or up to 75% of your home loan with the balance to track the BOE base rate for the remainder of the term.

There is a booking fee of £999 and customers have up to six months to exercise their drawdown option.

The rates will depend much on the loan to value percentage (the amount of the loan as a percentage of the home value) and both the variable rate and fixed rate are the same at the beginning of the loan and will start to change if/ when interest rates start to rise.

Examples of rates are as follows :

  • For an LTV of 70% (ie : for someone with a 30% deposit) is a 50/50 split at 2.69% or with 25% fixed and 75% as a tracker at 2.49%.
  • For an LTV of 80% (ie: for someone with a 20% deposit)  is a 50/50 split at 3.39%  or with 25% fixed and 75% as a tracker at 2.99%.

If you go to the HSBC website you can get a quote using their mortgage calculator. The maximum LTV is 80% for loans up to £500,000. You get to choose a 2-year fixed rate for a set percentage of your total borrowing requirements, with the remainder on a tracker rate and the options available to you are:

  • 25% on fixed and 75% on tracker
  • 50% on fixed and 50% on tracker
  • 75% on fixed and 25% on tracker

Although the maximum fixed rate period is just 2 years it may be something to consider if you were thinking about a short term fixed rate mortgage.

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