Split Loan Mortgage 'too complicated for borrowers'

Posted: 27 Apr 2010 11:41:27 GMT

The new Split Loan Mortgage - introduced by HSBC - is appealing in theory but will be too complicated for many borrowers, one expert has stated.

Paula John, editor of Your Mortgage magazine, says: "What the Split Loan Mortgage offers is a chance to hedge your bets, which will probably be appealing to a lot of people who can handle the complexity of the sound of the deal."

However, she states that the average British borrower may find it is a "layer of complexity too far".

The HSBC Split Loan product allows homeowners to fix a proportion of their mortgage, while the rest remains variable and in line with the Bank of England base rate.

According to the bank, the Split Loan Mortgage will see borrowers enjoy the best of both worlds by taking advantage of historically low rates, while enabling them to be flexible and overpay if they see fit.

Recent figures from GfK Financial show that first-time buyer numbers recently dropped below 350,000 for the first time in two decades.

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