Split Mortgages: Part Fixed, Part Variable

What Is a Split Mortgage?

A split mortgage, sometimes called a part-and-part mortgage, allows you to divide your total borrowing across two or more different rate types with the same lender. For example, you might fix 60% of your mortgage and put the remaining 40% on a tracker rate.

This approach gives you some of the certainty of a fixed rate combined with some of the flexibility and potential savings of a variable rate. It's a way of hedging your bets rather than committing entirely to one type of deal.

Split mortgages are available from a number of UK lenders, though not all lenders offer this option. You'll typically need to take both parts with the same lender, and the products available for splitting may be more limited than if you chose a single deal.

How Does a Split Mortgage Work?

When you take out a split mortgage, you agree the total amount you're borrowing and then decide how to divide it between the different rate types. Each portion is treated as a separate sub-account with its own interest rate, term and conditions.

Your monthly payment is the combined total of the payments on each portion. The fixed portion stays the same throughout its deal period, while the variable portion may change in line with the base rate or your lender's SVR.

When one or both deal periods end, you can remortgage each portion separately, or combine them into a single deal. This gives you ongoing flexibility to adjust your mortgage strategy as your circumstances and the market change.

Advantages of Splitting Your Mortgage

The main advantage is risk management. By splitting between fixed and variable, you reduce your exposure to interest rate movements in either direction. If rates rise, the fixed portion protects part of your borrowing. If rates fall, the variable portion benefits.

Splitting can also help with budgeting. The fixed portion gives you a baseline of certainty, while the variable portion allows you to potentially benefit from lower rates. This can be a more comfortable middle ground than going entirely fixed or entirely variable.

If your variable portion has no early repayment charges, you can overpay on that part without penalty, helping you reduce your overall mortgage balance faster. This flexibility isn't usually available on the fixed portion without incurring ERCs.

Disadvantages and Considerations

Splitting adds complexity to your mortgage. You effectively have two deals to manage, each with its own rate, terms and renewal dates. This can make it harder to keep track of your mortgage and more complicated when the time comes to remortgage.

You may miss out on the best rates. If rates fall significantly, only part of your mortgage benefits. If rates rise, only part is protected. You get a blended outcome that's never as good as having chosen the optimal single deal in hindsight, though of course hindsight isn't available at the time of choosing.

Fewer lenders offer split mortgages, which limits your options and potentially means you're not getting the most competitive rates available. It's worth comparing the blended cost of a split mortgage against the best single-rate deals to see which offers better value.