Lifetime Tracker - no fees - Good idea?

Amy56

Hi - I am about to come to the end of a fixed rate through the Chelsea BS, and their deals for existing customers are not that competitive, so I am considering remortgaging to another lender.

I am considering a lifetime tracker with HSBC. There are no fees or tie ins and I am struggling to see the downside - but feel that there must be!!

It is 2.09% above bank rate - so currently 2.59%, and whilst I am used to fixed rates for the security of knowing my monthly payment for a set time, in real terms we will overpay this mortgage and will be able to afford any increases when they happen.

Whats making me question it is that some banks have trackers for the same sort of rate but only over 2 years - why would someone want that for 2 years only when they could have it for a lifetime?

As there are no tie ins, I am free to move to an alternative product/company if I decide I no longer want the tracker - and whilst I realise that if this HSBC mortgage becomes expensive due to rate rises, then the likelihood any other products around at the time will also be expensive, but then that could be the case if I chose a fixed rate and that was ending at an 'expensive time'.

So I am really wondering if there is a downside to this deal that I am missing before I commit.

Any thoughts would be greatly received!!

Thank you:)

bclark

As long as there are definitely no tie ins then I can't see a problem. We took out a lifetime tracker with Nationwide 5 years ago and we were actually tied in for 5 years but thats worked out great.

Although I am no expert I think that it will be a fair while yet before interest rates start to rise so you should be ok for a while. Just make sure you keep an eye on the market so if things do change then you can jump to another rate quickly.

foreversummer

Amy56 wrote: »

in real terms we will overpay this mortgage and will be able to afford any increases when they happen.

Then go for it - and overpay, overpay and overpay. This will insulate you against interest rates rises when they do eventually happen.

Just one point that is often mentioned on these boards is that the HSBC is very picky over who they lend to particularly if you have a high LTV or anything but a perfect credit rating. Might be worth checking out those threads.

Thrugelmir

Amy56 wrote: »

So I am really wondering if there is a downside to this deal that I am missing before I commit.

There's no catch. HSBC have very specific underwriting criteria. So choose their borrowers carefully. With this product they are looking for a long term relationship with the customer.

DannyboyMidlands

Go for it. I just took a similar deal with First Direct, currently 2.89%.

I'm saving money elsewhere rather than over-paying but can shovel it into the mortgage should base rate rise uncomfortably (unlimited over-payments allowed). Can't see that happening for several years though.

phil_b_2

This is the deal I am going for too. lifetime tracker with zero fees (not even a valuation fee), 1.99% above base due to a 65% LTV and unlimited overpayments etc. It's the best deal on the market right now by a mile and I've spent god knows how many hours hunting good deals!

Go for it.

pinkteapot

Have said this many times on here - we took out an HSBC Lifetime Tracker last August and have been chuffed with it. We're overpaying massively while rates are so low. On fixed rates etc you're usually limited in how much you can overpay. This mortgage has unlimited overpayments and no tie-in period. Happy days!

The only downside is that it's a tracker so there is the risk that rates can rise. So long as you can afford the repayments if the interest rates go up, and so long as you're not of the view that rates are going to go up sharply soon, it's not a downside for you.

Bluemeanie_2

pinkteapot wrote: »

Have said this many times on here - we took out an HSBC Lifetime Tracker last August and have been chuffed with it. We're overpaying massively while rates are so low. On fixed rates etc you're usually limited in how much you can overpay. This mortgage has unlimited overpayments and no tie-in period. Happy days!

The only downside is that it's a tracker so there is the risk that rates can rise. So long as you can afford the repayments if the interest rates go up, and so long as you're not of the view that rates are going to go up sharply soon, it's not a downside for you.

I second this. I swapped to HSBC tracker with no fees on a 90% LTV and have constantly overpaid and got down to the 80% LTV rate. Everytime you hit the next percentage down you can just "request to swap mortgages" tab on the left in the internet banking it's great.

The reason I favour a tracker is, when I was on a variable, the mortgage company kept changing the interest rate willy nilly (it seemed, I'm sure in their heads they had a great reasons!). Where as least with the tracker it's the BOE base rates that dictate.

Jut my opinion!

Amy56

Thanks so much for all of your replies - I rang HSBC last night and have made an application (luckily my valuation was deemed accurate by their 'system' so just sneaked under the 65% lending for the lowest rate too - so very happy!!)

Thanks again for all of your responses:)

Catslovelycats

I've switched to this for when my current rate with HSBC ends in Feb. Being an existing customer I did online within about 10 mins! I found HSBC v efficient and helpful when I applied for my 1st mortgage with them 2 years ago and am happy to be staying with them.
It is as good as it seems! Best of luck with the application, Amy56.

retepetsir

Bluemeanie wrote: »

I second this. I swapped to HSBC tracker with no fees on a 90% LTV and have constantly overpaid and got down to the 80% LTV rate. Everytime you hit the next percentage down you can just "request to swap mortgages" tab on the left in the internet banking it's great.

The reason I favour a tracker is, when I was on a variable, the mortgage company kept changing the interest rate willy nilly (it seemed, I'm sure in their heads they had a great reasons!). Where as least with the tracker it's the BOE base rates that dictate.

Jut my opinion!

That's very interesting! I took out the 90% LTV Lifetime Tracker with them last February and am still on that rate...I don't appear to have internet banking set up for the mortgage account (I mainly bank with Barclays so will need to do that).

Does it work out this percentage for you or did you do it yourself?

Thanks