Thu 6th Dec, 2007
Split your mortgage between fixed and tracker
Five interest rate rises in a row have really hit us hard and many of us are now left struggling to find the right mortgage.
There are a number of options available to us however so finding the right mortgage is very important. The fixed rate mortgage could avoid the risk further rate rises in the future but lenders are also aware of this and increasingly fixed rate home loans come with shorter and shorter renegotiations periods as well as increasing renegotiation charges. So whilst getting out a fixed rate mortgage is always an option worth considering it may not necessarily be your best one.
There is no avoiding the fact that as interest rates continue to go up our repayments will increase with them. So what are we supposed to do to protect ourselves from getting out of our depth and falling into financial difficulties?
Some lenders have introduced a new option that while slightly unorthodox could be worth some serious consideration. Lenders are allowing borrowers to split their mortgage into two and have half on a fixed term basis and the other half of the loan on a tracker basis. This takes out some of the risk for the borrower but will mean taking extra time in searching to find a lender who is willing to make the deal with you.
The arrangement fee could be higher than with a non-split mortgage and the time in finding the mortgage could take twice as long, however you are splitting the risks involved and if you don’t like to take chances with your money than this could be the option for you.