HSBC Split Loan Mortgage 'may be too complex'
www.moneynews.co.uk > Mortgages > HSBC Split Loan Mortgage 'may be too complex'
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HSBC Split Loan Mortgage 'may be too complex'
Tue 27th Apr 2010
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Editor of Your Mortgage Magazine Paula John described how the deal allows people to "hedge their bets" as to whether a fixed-rate or a variable-rate mortgage is the right way to finance a house purchase.
She pointed out that variable rates have been lower in recent years, but there is always the chance that these might go up.
Many people will choose to pay a little bit extra for a fixed-rate deal, almost as an insurance that the rate - and thus the monthly repayments - will not increase and make a home unaffordable.
Ms John remarked that this new product from HSBC may be the first of its kind in the UK, by her recollection, although there may be a "layer of complexity too far" for many borrowers, since people have to do some demanding mathematics to work out how much they will pay in each situation.
"While I think the Split Loan Mortgage is actually a really good idea, with lots of flexibility within, I'm just not sure that the British borrower will want to get their head around it. I think that's probably a shame," explained the expert.
Her comments were made regarding the launch of the HSBC Split Loan Mortgage, which allows people to fix 25, 50 or 75 per cent of the money borrowed, while taking the remaining portion on a tracker deal.
It was brought out on April 26th and is available for customers looking to borrow up to £500,000.
Ms John suggested that the average homeowner may not always have the inclination to try to work out the cost of the arrangement and for that reason it may not be hugely popular.
In her view, it will be interesting to see if any other mortgage providers follow suit.
Click here for more mortgage news
Related News : Mortgages |
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Related News : HSBC |
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