Premier current account's overdraft limits

cem

Have been looking at different bank accounts and wondered what you'd need to do (i.e show the bank) and how you'd approach the bank to get a LARGE personal overdraft limit ... say £90k

A friend of mine banks with hsbc and has the premier account..he earns around £80k but has only been able to get a £17k limit..He has approached his relationship manager at the bank who's looked at him very oddly and asked him why he needs such a large limit...the answer below wasn't to their liking.

For those wondering 'Why' then simply put..Having quick access to that kind of money gives you a lot of leverage to be able to buy things very quickly and cheaply and then re-finance in your own time

Any tips / experience / comments greatly appreciated.

madgagoo

Maximum personal unsecured lending is usually £25k, this is a limit that I believe means that the lending is covered by the CCA. Anything over this gets a bit (read very) complicated and usually banks won't lend more than this to an individual.

If you need a larger overdraft then you would need to think about setting up a company and borrowing through that.

premierfella

I think the reason would/should be fairly immaterial for an overdraft request.

Overdraft limits will often equate to some x number of months salary (as they are there for short term liquidity purposes). On that basis £17k against an £80k salary would already appear to be fairly generous.

Since HSBC is mentioned, I have a HSBC InvestDirect Plus account - that allows borrowing against the portfolio assets at a rate that is very favourable compared with overdrafts (Trading Reserve - I think the rate is still 6.75% EAR). Worth a look if your friend has a share portfolio.

cem

Thank you to both.

I'll look Invetdirect..You mention portfolio assets..I am assuming that's all shares? Person in question does have a considerable property portfolio and I wonder if they would lend against that?

Setting up a company...that's going to take Time as I am sure you would need to build a credit history and be able to show financial track record before lenders even say hello..unless you have a personal garantee in place in the form of generous equity in your property for example?

Thanks for mentioning the investdirect product..would lie to hear about any others people may have used or know about for this purpose?

madgagoo

Just had another thought, if you (or friend) have quite a lot of equity in property(ies) then you could look at an offset mortgage with a flexible facility. I.e. Agreed mortgage facility up to £120k but only drawdown £30k initially, this would leave a facility that you could draw on as and when with a couple of days notice.

As long as whichever product you go for allows unlimited overpayments then you could repay whenever you wanted. Would be quite a cheap way of borrowing as well (about 3.75%).

cem

Would it possible to get a portfolio offset mortgage ? As the LTV across the portfolio varies significantly but the average for all is reasonable. Which lenders would look at that would you know?

cem

madgagoo wrote: »

Just had another thought, if you (or friend) have quite a lot of equity in property(ies) then you could look at an offset mortgage with a flexible facility. I.e. Agreed mortgage facility up to £120k but only drawdown £30k initially, this would leave a facility that you could draw on as and when with a couple of days notice.

Been thinking about this overnight and trying to figure it out in my head..Hopefully you can correct me or fill in the gaps ?

Say a property portfolio is worth £500k with around 60% LTV. What you are saying is that you agree a borrowing / mortgage limit of up to 75% and then essentially you have a 15% buffer at your disposal when required?

madgagoo

I only have experience of borrowing like this again one (main) residential property.

How you describe it above is how it would work though.

I think if you're looking at borrowing against a portfolio of properties then again you are into the realms of business lending, which is outside my speciality I'm afraid. Maybe talk to your bank about it though, I'm sure they would be able to help.

cem

Business lending sounds about right but is that the commercial lending part of the bank?

For flexible offset mortgages, Natwest only seem to be for Residential and barclays max limit for additional borrowing is £20k...

I am surprised that no one here has or knows of any other ways to have large additional borrowing power (with the use of property portfolio as opposed to shares) ? ? ?

Twister84

Such large overdrafts for Private customers is one of the things our department processes.


Overdrafts over £25k are quite common, and there usually is a valid (sometimes absurd!) reason as to why such a high overdraft is required. Submitted along with the application, are usually repayment plans, and evidence, of course.


The whole application is usually looked at on an individual basis and usually there are other conditions that need to be met. Such high overdrafts are also done on quite a short term basis, usually less than a year - even just a month or 2.


All in all, it is possible if you're a Private customer.