The HSBC lifetime tracker – is there a catch?

pph

FTB so a bit worried!

80% LTV – nice, can keep some savings instead of struggling up to 25% deposit and wiping out savings. With 80% LTV they offer a fee paid option (3.1% now) and “no fee” (3.29%).
Unlimited overpayment per month / lump sum as you wish
2.49% above BOE for life

Just seems a bit too good really.. frankly I thought someone like HSBC wouldn’t be such good value? Their savings rates are pretty poor?

https://mortgages.hsbc.co.uk/product/A001001879000000000000000000-lifetime-tracker-standard

CLAPTON

2.49% above BoE rate seems high.
not perhaps now by if BoE was 5% one would expect a mortgage rate to be about 6-6.5% rather than 7.49%
but maybe alright for the next few years if BoE stays low

originalmiscellany

Are you (as Clacton said) in a position to save a decent chunk in the short term? Interest rates are n't going to do much for the next few years, so if you take this out, I'd aim to clear as much as possible off the mortgage in say 3 years time, so you can then re mortgage when rates go higher and hopefully you have a better loan to value.

For what it's worth, many (some) people on here have a HSBC/First Direct mortgage and they offer very competitive rates currently as they didn't over stretch themselves during the time when others were making risky decisions around them!

gemma.zhang

nothing dodge.

we applied two weeks back, and got accepted within 5 days.
all going well. lt's the indeed the best one out there if tracker's what you are looking for.

i talked to my broker initially, he said straight away, if you can apply successfuly for this product, go ahead, it's very hard to beat.

originalmiscellany

Gemma - that too was our advisers advice to us. "If you can, apply direct as I can't match the deals", or words to that effect. HSBC and First Direct insist on not using brokers I believe, so you have to do it rather than a middle man.

pph

originalmiscellany wrote: »

Gemma - that too was our advisers advice to us. "If you can, apply direct as I can't match the deals", or words to that effect. HSBC and First Direct insist on not using brokers I believe, so you have to do it rather than a middle man.

Same here.

CLAPTON wrote: »

2.49% above BoE rate seems high.

but maybe alright for the next few years if BoE stays low

Well that's the plan. And when they start going up fix ASAP.

originalmiscellany wrote: »

Are you (as Clacton said) in a position to save a decent chunk in the short term? Interest rates are n't going to do much for the next few years, so if you take this out, I'd aim to clear as much as possible off the mortgage in say 3 years time, so you can then re mortgage when rates go higher and hopefully you have a better loan to value.

Yes, we are providing Greece and Italy don't pull us down with them. So the idea is to save in parallel in case of armageddon. Then if no armageddon after three years, put the savings into equity with no penalty.

originalmiscellany wrote: »

For what it's worth, many (some) people on here have a HSBC/First Direct mortgage and they offer very competitive rates currently as they didn't over stretch themselves during the time when others were making risky decisions around them!

Interesting!

Thrugelmir

pph wrote: »

Just seems a bit too good really.. frankly I thought someone like HSBC wouldn’t be such good value? Their savings rates are pretty poor?

HSBC's main business is in Asia. So funding mortgages is not an issue.

Mrs_Z

Yes, there is a catch - which is that if (or when) the interest rates go up, so will your monthly payment and unless you've budgeted for that you could be in trouble.

Equally, if you can managed to save a bit more to only having to borrow 60 or 70%, better rate you will get. It will take longer of course, but I don't think the house prices are rising fast in the near future.

Apart from that I think HSBC has very competitive rates (we remortgaged with them with a life time tracker).

pph

Mrs_Z wrote: »

Yes, there is a catch - which is that if (or when) the interest rates go up, so will your monthly payment and unless you've budgeted for that you could be in trouble.

Well we'll pay less for mortgage than rent for atleast 3 years so we will save to make sure that when they do go up we aren't caught out. Need to be disciplined.

Mrs_Z wrote: »

Equally, if you can managed to save a bit more to only having to borrow 60 or 70%, better rate you will get. It will take longer of course, but I don't think the house prices are rising fast in the near future.

Very roughly:

20% deposit means we keep almost 1 year's savings in the bank, good security for these times
25% only ~£75 a month less and no savings

With this HSBC we can put the 5% difference into savings and then if no trouble in three years increase the amount of equity (add the 5%+accrued interest).

katejo

pph wrote: »

FTB so a bit worried!

80% LTV – nice, can keep some savings instead of struggling up to 25% deposit and wiping out savings. With 80% LTV they offer a fee paid option (3.1% now) and “no fee” (3.29%).
Unlimited overpayment per month / lump sum as you wish
2.49% above BOE for life

Just seems a bit too good really.. frankly I thought someone like HSBC wouldn’t be such good value? Their savings rates are pretty poor?

https://mortgages.hsbc.co.uk/product/A001001879000000000000000000-lifetime-tracker-standard

I have a lifetime base rate tracker which was recommended to me by a broker in 2007. I really like it. When I took it out, the interest rate was 6% but for the past 2-3 years I have been paying 0.77 (base rate plus 0.27). This means that I have paid off a third of my mortgage in just under 6 years (I bought the house in Jan 2006).
There is a risk of interest going up too high but my mortgage allows me to switch to a fixed rate for no additional fee. Also it would not affect me too much because of the overpayments I have made.

If I move house again, I will be able to transfer this mortgage deal to the new house. I haven't yet found any catches in it.

pph

katejo wrote: »

I have paid off a third of my mortgage in just under 6 years (I bought the house in Jan 2006).

Good luck to you! Nice to hear a good story in these troubled times :T