The part kept as a variable offset mortgage means borrowers can use any savings to reduce or offset the interest paid on the loan. Newcastle’s Offset mortgage has an initial rate of SVR minus 2.2 per cent (currently 4.09 per cent) for the first six months reverting to SVR less 1.5 per cent for the rest of the term.
At the same time borrowers can choose to hold a separate part of the mortgage in a five-year fix at 5.40 per cent which may offer security against any future interest rate rises.
The ‘Mix and Match’ mortgage allows customers to decide how much of their mortgage they would like offset by their savings and how much they would prefer at a guaranteed rate.
The allocation between the two types of mortgage is chosen at the start of mortgage and remains flexible. However the product does have a 5 per cent redemption penalty during the initial five-year term.
Robert Hollinshead, chief executive of the Newcastle Building Society, said: “We believe this is a unique product that combines the highly competitive rates of two completely different mortgages. It is a flexible approach to changing market conditions. We have found that while people are keen to avoid rate rises they can also be reluctant to commit themselves entirely to a fixed rate for the long term.”
