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Co-op 'mix and match' mortgage offers tracker and fixed hybrid Go compare with our comparison table

Co-op 'mix and match' mortgage offers tracker and fixed hybrid

13 July 2010 / by Rachael Stiles

Tracker or fixed? That is the question. But, thanks to a new mortgage from the Co-operative bank, borrowers no longer need to agonise over whether to throw caution to the wind and go with a tracker mortgage in the hopes that interest rates will remain low for the foreseeable future, or to choose the security of a budget-friendly fixed rate mortgage.

The Co-operative Bank is offering borrowers the best of both worlds with its 'mix and match' mortgage deal – allowing them to fix the rate on some of the balance, and track the base rate with the rest.

Borrowers can mix and match from the range of Co-operative mortgages available, combining any proportion of two mortgage products, but will only have to pay one single application fee.

So, what's the catch? It seems the only one is that customers must mix and match mortgages designed for their loan to value, so they could not choose a mortgage that was available up to 60 per cent LTV if they need to borrow 75 per cent LTV.

Also, while there is only one fee, it will be the most expensive one of the two mortgages.

But otherwise, customers can pick and choose the two mortgages they want, benefitting from the flexibility of a tracker and the security of a fixed rate, even if they are for different terms – for example, a three year tracker with a five year fix.

Most economists predict that the Bank of England will not raise interest rates until 2011, meaning that tracker mortgage customers will contiue to enjoy lower monthly payments, but fixed rate mortgage remain the only viable option for some borrowers who cannot afford to take the chance that their payments will rise within the term of the mortgage.

As James Hillon, Function Leader Mortgages for The Co-operative Financial Services, said: "Many borrowers are unsure whether now is the time to fix their mortgage or if they should take a tracker rate product. The option to take out a split loan with only one application fee gives customers the flexibility to take advantage of the benefits that both products offer at no extra cost."

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Our View:

"Credit repair mortgage service to help you get back to a high street mortgage deal - If you have suffered a one off event such as divorce, redundancy, serious illness which has resulted in a "bad" credit entry on your credit file over 12 months ago this service will help you get back on track".

Representative Example:

A repayment mortgage of £120,000 payable over 28 years and 1 month initially on a fixed rate for 2 years at 1.99% and then on the lender current variable rate of 3.69% (variable) for the remaining 26 years and 1 month would require 24 monthly payments of £465.20 and 312 monthly payments of £565.39 and one final payment of £565.19.

The total amount payable would be £189,357.67 made up of the loan amount plus interest (£68,161.67), booking fee (£999), completion fee (£30) and valuation fee (£197).

In this example the overall cost for comparison is 3.7% APRC representative.