HSBC - Renegotiating Loan

kingstreet

If the loan was fully capital & interest, £219,674 at 5% over 18 years, the monthly payment should be £1,544.38.

Something wrong somewhere. If it was part & part, the monthly payment would be less, not more.

socrates

kingstreet wrote: »

If the loan was fully capital & interest, £219,674 at 5% over 18 years, the monthly payment should be £1,544.38.

Something wrong somewhere. If it was part & part, the monthly payment would be less, not more.

Which is what my basic calculations came up with!

I am not even sure the sum outstanding is correct

I have reduced the outstanding amount by £74,000 over the last five years - on payments of around £100,000 - these are approx - up or down (the payments bit)

socrates

Looking at these figures I can only imagine they have reduced the Loan Term

I played around with some calculators and the figures they are quoting work on 12.5 years roughly

I have now asked for a Draft Loan Agreement to see EXACTLY what is going on

socrates

Update

Well its all sorted now

The figures were based on one of the parts of the whole deal being on 8 years (remaining)

So in essence - overpaying for the last 5 years has done me some good

One thing that sticks in my throat is that The Account Manager - knew what the 'supposed' minimum rate he could offer me - but still quoted a higher figure (tried it on)

I am interested to know from the people who deal with the Real Estate Division can confirm that 4.5% is actual the lowest rate above base that HSBC offer

Nick_chap

Just reading the posts here, I had the same situation with HSBC where they wanted to use this renegotiation clause back in 2009.
I like you protested and argued my case because when I first signed my agreement which contained that clause I was told that this clause is never used unless the bank thought the loan became risky. This clause did worry me at the time but I was assured that the clause was a standard one and would never be used.
I was contacted by my manager after a few months and he said HSBC has had a change policy regarding this clause and would not use this and nor would in the future. He even said " HSBC had decided that to use this clause on loans that are not a risk would be un-gentlemanly"

I never heard from this manager since November 2009 until last month he turned up in my office just to say that HSBC has changed it's policy again and would be using the clause at my next anniversary (two years time) he also said you could look for an other lender.

Here we go again! HSBC act more like a backstreet lender than an international bank.

Thrugelmir

Nick_chap wrote: »

Here we go again! HSBC act more like a backstreet lender than an international bank.

Two years warning seems fair enough. So is acting in a proper manner.

If you decided to terminaye the relationship would you give HSBC the same notice? I doubt it. That's business though.

Gentoo365

I would be interested to know what their 'target' is for the renegotiation. i.e. how many loans they are willing to leave 'as is'.

The letter is correct that the capital requirements for commercial loans have increased. So the bank does have to hold more capital, hence the margin is reduced (and can become negative). However the capital they would have to hold for a non-performing loan would be far worse.

Therefore one negotiating 'tactic' would be to persuade them that while you can fully afford the existing payments you would struggle to meet the increased payments, and would also struggle to re-mortgage elsewhere at an affordable rate.

Is it worth therefore drawing up a rough budget explaining what you would consider to be an acceptable payment, then suggest that.

As I said in the beginning. I would expect them to have some sort of 'target' here. So there may be some leeway.

I am not experienced in this area so consider all the above as something to think about, rather than fact.

socrates

Gentoo365 wrote: »

I would be interested to know what their 'target' is for the renegotiation. i.e. how many loans they are willing to leave 'as is'.

The letter is correct that the capital requirements for commercial loans have increased. So the bank does have to hold more capital, hence the margin is reduced (and can become negative). However the capital they would have to hold for a non-performing loan would be far worse.

Therefore one negotiating 'tactic' would be to persuade them that while you can fully afford the existing payments you would struggle to meet the increased payments, and would also struggle to re-mortgage elsewhere at an affordable rate.

Is it worth therefore drawing up a rough budget explaining what you would consider to be an acceptable payment, then suggest that.

As I said in the beginning. I would expect them to have some sort of 'target' here. So there may be some leeway.

I am not experienced in this area so consider all the above as something to think about, rather than fact.

There is NO negotiation and they are quite happy for you to move on

What really annoyed me was how they tried to get 0.5% extra out of me when they knew their actual (minimum) position was 0.5% less - why play games like that when I have been a customer for 20 years plus??

Gentoo365

oh, and you could argue that while the capital requirements have been adjusted, the margin is based on the overall cost of funding, of which the capital requirement is just a part. Maybe suggesting that the bank make use of the various Bank of England schemes (such as Funding for Lending, as well as the standard Discount Window Facility) to reduce their overall cost of funding and therefore increase their margin in a way that is less likely to increase the rate of delinquency.

EDIT - don't actually say this lol

Nick_chap

Thrugelmir wrote: »

Two years warning seems fair enough. So is acting in a proper manner.

If you decided to terminaye the relationship would you give HSBC the same notice? I doubt it. That's business though.

Thanks for pointing that out, so HSBC are really looking after me?
So my relationship manager who said in 2009 the renegotiation clause would not ever be used on good customers and the original branch manager who said the clause would never be used as he persuaded me to move the loan from LloydsTSB which was a 20 year fixed rate he even signed my copy of the agreement indicating this.
The loan is 40% of the property values.

So HSBC were looking after me when the same relationship manager arranged a meeting with me a month ago to say that HSBC had changed their policy on this clause and would again seek a higher rate at the ten year anniversary. And would at the same time change the interest only to a capital repayment plus they would like my properties valued regularly. The cost of the valuations would be deducted from my account. The cost of the first valuation is £1500.00 for one property. You are probably right as they are giving me two years notice I saw it as they wanted me to leave as quick as possible and would do everything possible so they didn't have to wait the two years.
When I questioned my relationship manager about what he had said in October 2009 he said " I will deny saying it"
But I guess this is all done fairly and it's just business?