HSBC Discount rate 4.99%

janeymates

We are applying for a new mortgage and have come across this deal, however, the fee is a whopping £2499!! and you can't add it onto the mortgage, so another fee to pay upfront.

As we cannot sell our current home, we are renting it out, and borrowing extra funds to put down a 25% deposit on the new house. The rent will cover the mortgage payment on interest only and if it is empty for any period, we can still afford both payments.

For this reason we are initially looking for the cheapest monthly cost, short term (say 2 years) to get us up and running. We will re-assess the situation then.

The nearest tracker rate (Nationwide, base plus .68%) comes in at around £85/month more expensive, this also has a £1499 fee but you can add it to the loan. Obviously I realise that this depends on both rates staying the same, but still it is a large chunk of cash over the 2 year period!

Just wondered what anyone's thought's were, and if anyone else has one of these discounted mortgages? The rate is 1.26 off SVR, currently 6.25%.

I begrudge paying such a high fee, but when using a comparison calculator, taking into account fees, over a 2 year period the HSBC still comes out about £1000 better off.

thanks in advance!
J

mpsavuk

A discount rate of 4.99% maybe but you should still calculate the £2499 fee as a percentage of the amount you are borrowing.

Then add that figure to 4.99 and thats the true rate of interest you will actually be paying.

janeymates

mpsavuk wrote: »

A discount rate of 4.99% maybe but you should still calculate the £2499 fee as a percentage of the amount you are borrowing.

Then add that figure to 4.99 and thats the true rate of interest you will actually be paying.

Yes, thanks mpsavuk, this has been calculated in my figures as mentioned above, and the saving over the 2 years is still £1000 - based on the current rates of course. We are just a bit wary of the SVR, as at least with bank base rate you know when it goes up/down so will your mortgage, not necessarily so with the SVR.
thanks for the reply

lisyloo

Hi Janey,

Is this mortgage on your existing home?
i.e. the one you are renting out?

Have you agreed this with the lenders.

I'm asking because if you are renting it out then you should be looking at BTL rates and not residential rates.

Or have I got the wrong end of the stick and this is for the ewn property?

UK007BullDog

easyfinance wrote: »

For more info, please free to contact me.

Although I am a financial advisor, this is not financial advise.

Eugene

Eugene, you are not allowed to ask for business nor are you allowed to encourage posters to contact you directly. This would breach the rules on this board.

Before you post further please read the thread for Mortgage and financial advisers of what you are allowed to do and what not. Plus get your signature.

http://forums.moneysavingexpert.com/showthread.html?t=325378

neverdespairgirl

janeymates wrote: »

As we cannot sell our current home, we are renting it out, and borrowing extra funds to put down a 25% deposit on the new house.

<wince>

is that really a good idea? You may well be doubly exposed to a falling property market.

happybroker

easyfinance wrote: »

Janey
First if you are looking to rent your home, you should tell this to your lender, if this is done after they lend to you, they wiil usually charge 1% on top of their rate. You must find a home insurer who allow you to this or at best choose a buy to let insurer. I don't want to think what should happen if your tenant set fire and you don't have the right insurance. The best think is to take a buy to let loan from the start, but this come a bit expensive this days.
Yes, you are right HSBC is the cheapest product(even with this huge fee) and suits very well your plan. And you need only 20% deposit NOT 25%. Is an 80% loan to value product. So you will have some money left to pay the fee.
For more info, please free to contact me.

Although I am a financial advisor, this is not financial advise.

Eugene

Firstly Eugene, if you are an adviser get your signature sorted as per the T&C's you have been told about this on other threads.

Secondly, if you are an adviser, I would be interested to know which lenders "usually" charge 1% on top of the contractual rate when the property is let after completion. I have never seen this in 15 years of advising on mortgages so need to know if I have missed something.

Finally, you aren't allowed to post for business, that's spamming and not welcome. If you are on here to try and get business I would guess that prospective clients may worry about your inability to follow even the most basic of rules