Small mortgage - best options?

holly_hobby

CitySlicker wrote: »

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.

I've had a quick tinkle on their site, and yes 10k does appear to qualify for the 2.69% lifetime tracker product .... min term of 5 yrs though, so this is the min term you must apply for (although if there is no ERCs then this is really academic).

Have a chat with them direct and see where it takes you.

Hope this helps

Holly

4$£&*(£$&*(!

holly_hobby wrote: »

Hope this helps

Holly

It does that's brilliant thanks. Based on that list I'd say I am well up there, the only possible issue is I took out another credit card a couple of months ago to get better cashback but it's a very low limit and, like my other card, is cleared in full. Long continuous stable employment, I'm hoping they won't be too picky!

Marie27lol

Howdi

Congrats on your saving

Blimey things have changed a lot, but 8 years ago I had come to the end of my FT, and was looking for a £15k mortgage (had an endowment) and had massive problems in finding a bank wiling to accept such an application.

"Its too small! That is a loan, not a mortgage!!!!"

In the end it was a Halifax with a 6.7% (which seems a lot now!), but there was no min OP penalty.

Good luck
M

holly_hobby

Yep was to do with loans under 25k being regulated under the Consumer Credit Act which mge lenders didn't want to get involved in . So the solution for small loan applicants, was to seek a pen free deal, and make the lump sum repayment of the excess not reqd.

Thats now changed, hence min loans of 10k (or lower) being available with some but not all lenders, whom have chosen to retain the min 25k for operational reasons.

Hope this helps

Holly

4$£&*(£$&*(!

Ahhh that makes sense about the £25k limit. Presumably even if I struggled with £10k but someone wanted to offer me £25k with no overpayment restrictions, I could simply take £25k then repay £15k straight away reducing the mortgage down to £10k?

The tough bit is finding a lender who is both fee free and also does not restrict overpayments. HSBC ticks both boxes for that but most others I have come across either charge product fees or will only allow between 10-20% overpayments in a year without penalties.

Thrugelmir

CitySlicker wrote: »

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.

I would suggest that you expecting too much from the website. As its merely an indicative guide. Product by product HSBC will have a target market with different criteria.

holly_hobby

CitySlicker wrote: »

Ahhh that makes sense about the £25k limit. Presumably even if I struggled with £10k but someone wanted to offer me £25k with no overpayment restrictions, I could simply take £25k then repay £15k straight away reducing the mortgage down to £10k?

The tough bit is finding a lender who is both fee free and also does not restrict overpayments. HSBC ticks both boxes for that but most others I have come across either charge product fees or will only allow between 10-20% overpayments in a year without penalties.

Whilst as I say min loans have reduced with some lenders, you do need to be aware that there may be minimum valuation restriction (ie - typical min property valuation of 40k with high st lenders - which I'm sure your property should exceed).

If your fee free HSBC app fails, and you (or your broker whom may charge a fee) can't locate a similar product - you'll have to decide whats more important to you ...

Finding a lender with fees, but no ERCs whom will accept the 10k mge
OR
Going with a lender with no or neglible fees, but an annual restriction on lump sum reductions (if you don't want to suffer an ERC).

A bit of number crunching will determine which route over the term, will have the lowest cost of borrowing .... which you may well find is the fee incurring deal ...

Anyhoo ... over to you now ....

Let us know how you get on ....

Hope this helps

Holly x

4$£&*(£$&*(!

Thrugelmir wrote: »

I would suggest that you expecting too much from the website. As its merely an indicative guide. Product by product HSBC will have a target market with different criteria.

If a bank is being unfairly restrictive they could fall foul of ombudsman rules. As I said earlier I get banks have to make a profit but as I also said without being disrespectful you appear to have me down as having problems securing any mortgage with this amount which I simply don't think is the case. I feel Holly's input is more factual so there's a bit more credence to it.

Thanks for your input though.

holly_hobby

Well a lender can set their own criteria, which may not suit applicants !

However, if they say they don't have a min loan, or a min loan of 10k, 25k or a 1m (or whatever they choose), that IS their minimum loan (at least for illustrated products) - and as long as LTV, min valuation and status requirements are met, a low loan amount within published paramters shouldn't negatively affect the application.

I would put this to bed now, and contact HSBC when you're ready - if the app doesn't proceed, then you have some guidance on how to move forward with this.

Hope this helps

Holly

Thrugelmir

CitySlicker wrote: »

If a bank is being unfairly restrictive they could fall foul of ombudsman rules.

What rules? Lending is a commercial decision. There is no right to a mortgage although many seem to believe so. The FOS is not an appeals service.