Small mortgage - best options?

4$£&*(£$&*(!

For the past couple of years I have been saving towards moving to another house (I already own my current home outright). If I continued to do this I'd have enough to buy the property I wanted outright in about a year. As it stands I'm about £10k off my target.

I'm really keen to move right now though and would like some thoughts on this. The housing market in my area seems fairly fluid at the moment but better than it has been for 3-4 years. That's a big part of the reason I want to move now as I can see prices significantly changing putting my preferred property back out of reach.

So here's the question. I've seen HSBC tracker mortgages, fee free, with tiny percentages. I reckon if I ask for £15k (to be on the safe side) I'd be able to take it over five years but if I overpaid on it I would clear it in full within the year. That means the mortgage would only cost about £200 in total. This seems to me to be a bit too good to be true. The figures online all add up though, so am I missing something or is this genuinely practical?

Also am I best off getting a higher mortgage offer in principle whilst I'm looking for a house just in case I find that perfect house that costs a few pounds more, or could this cause problems when I say hang on I only want £10k/£15k? (I've already checked £10k is the minimum loan amount).

All advice greatly received thanks.

(The mortgage I am considering is the Lifetime Tracker Special Fee Free with HSBC).

Thrugelmir

HSBC wouldn't be interested in such a small loan.

Have you considered a personal loan instead?

holly_hobby

HSBC are direct business only and although tend to have pretty competive rates, this is primarily due to their strict UW and pickiness (only like squeeky clean, low risk business), and you are quite right they do have a minimum mge application of 10k.

There are further providers in the market place whom will also accept the 10k initial borrowing you require (although many do have a min loan of 25k, but there are ways to work with this;) ) - so at this moment it is unnecessary to go down the personal loan route, which isn't for property purchase, and will have a higher payrate in any event.

Of course any succesful mge application will depend upon you meeting the lenders status checks, and you may want to also have a chat with a mge broker to sniff out any other competitive deals that fit the bill - but the one you've selected doesn't seem too bad on the face of it (but then I haven't compared the market).

Hope this helps ....

Holly

4$£&*(£$&*(!

Thrugelmir wrote: »

HSBC wouldn't be interested in such a small loan.

Have you considered a personal loan instead?

Are you saying they're likely to say no due to the amount? Can you give me an idea why, as their minimum amount is £10k so I can't see what grounds they'd turn me down on? (I have an excellent credit background).

holly_hobby

CitySlicker wrote: »

Are you saying they're likely to say no due to the amount? Can you give me an idea why, as their minimum amount is £10k so I can't see what grounds they'd turn me down on? (I have an excellent credit background).

No they won't turn you down on an application for 10k (if the property is for your primary residence), as that is their min loan amount - but do check that it also applies to fee free deals (where you may find its a min initial loan of 25k) .

You may however fail their status checks, which is a different thing altogether.

Hope this helps

Holly

4$£&*(£$&*(!

holly_hobby wrote: »

HSBC are direct business only and although tend to have pretty competive rates, this is primarily due to their strict UW and pickiness (only like squeeky clean, low risk business), and you are quite right they do have a minimum mge application of 10k.

There are further providers in the market place whom will also accept the 10k initial borrowing you require (although many do have a min loan of 25k, but there are ways to work with this;) ) - so at this moment it is unnecessary to go down the personal loan route, which isn't for property purchase, and will have a higher payrate in any event.

Of course any succesful mge application will depend upon you meeting the lenders status checks, and you may want to also have a chat with a mge broker to sniff out any other competitive deals that fit the bill - but the one you've selected doesn't seem too bad on the face of it (but then I haven't compared the market).

Hope this helps ....

Holly

That's really useful thank you. I've done a market comparison and the HSBC deal does seem the best with no fees, given the overall interest cost for the deal if I clear it over a year is only a couple of hundred pounds I'm not bothered about shopping around much more.

I am a bit concerned about the comment they may turn me down to the low value though, and a personal loan doesn't seem economical at all for the amount I want to borrow, plus I always like to think of 'what if' - my idea is borrow £15k over five years, pay it back in one, cost £200 - but what if I cannot work tomorrow? I could easily afford £15k over five years, a loan wouldn't be as flexible as this. So I'm ruling out personal loans.

I think my first step is tidy up my home this week, get a couple of valuers in next week, speak to the bank next weekend (I don't usually go in but this is one of those occasions I may go in person).

4$£&*(£$&*(!

holly_hobby wrote: »

No they won't turn you down on an application for 10k (if the property is for your primary residence), as that is their min loan amount - but do check that it also applies to fee free deals (where you may find its a min initial loan of 25k) .

You may however fail their status checks, which is a different thing altogether.

Hope this helps

Holly

That helps incredibly thank you (I wrote my last post as you were writing). I'll have another look at their website for fee free.

What sort of status checks are involved? I work full time, no credit problems, couple of credit cards balance always paid in full, on electoral roll etc.

4$£&*(£$&*(!

I've been looking at HSBC's website and it's tough finding if £10k is fee free, but what I did was use a product comparison tool and entered I was looking for £10k - it returned fee free products. I also tested entering £9k and it said no suitable products were available so I take it borrowing £10k can be fee free.

Thrugelmir

CitySlicker wrote: »

Are you saying they're likely to say no due to the amount? Can you give me an idea why, as their minimum amount is £10k so I can't see what grounds they'd turn me down on? (I have an excellent credit background).

No profit to be made at the interest rate you are seeking to borrow at. So in the banks interest to direct you to alternative products.

holly_hobby

Status checks/credit scoring assessed such things as :-

Registered on voters roll at current address
Payment profile history (ie how much access to and outstanding finance do you have, do you make payments on time/clear the balance each month, etc).
Any adverse history (defaults, CCJs, Bankruptcy Orders)
Employment history & salary

Other personal info is used in Credit soring, that varies between lenders whom place different weighting on different aspects ... so I won't go into that.

But if you are on the VRoll, have a good and clean credit history, proof of employment and sufficient income, then you seem a good candidate for HSBC - but as I say they are picky.

Hope this helps

Holly

4$£&*(£$&*(!

Thrugelmir wrote: »

No profit to be made at the interest rate you are seeking to borrow at. So in the banks interest to direct you to alternative products.

As far as they're concerned though I'm taking out £15k over five years (or 10k - or whatever amount I'd need). If I kept it over five years they would be making a couple of grand out of me easily. They're not to know I'm going to clear it in the first year, so as long as I meet their checks and borrowing criteria I can't see what grounds they could refuse me?

Of course in any situation it will always be in the bank's interest to maximise profit, but you've already said I will be turned down just on wanting £10k as they won't be interested and without wishing to sound disrespectful that just doesn't seem true.