HSBC booking fees and current accounts

glocal

14 months after I got my tracker mortgage with HSBC their rate dropped from 2.65% to 1.99%, so I am thinking about remorgaging to get the same product and pay about £40 less per month. Their ridiculous booking fee is £999, which will take me a little over 24 months to recover through lower monthly payments (£999/£40).

Now, if I open a standard current account with them the fee drops to £499. I don't see why I wouldn't open that HSBC current account, only pay in the required £500pm, never actually switch from my Santander 123 and eventually ditch it after a while (but how long?). In fact, if I open an HSBC Advance current account (£12.95 fee per month, 12 months contract, no requirement to pay in every month), the booking fee drops to zero. So, Advance will cost me £12.95 x 12 = £155.40 which is much lower than the £499 or £999 mortgage booking fee. Is there something I am missing here? I don't see any terms preventing that scenario. When I asked HSBC customers service over the phone whether at some point in the future I could switch my current account from HSBC without penalties, I was told they couldn't answer that question!

CKhalvashi

The only issue I see with the £500 a month into HSBC would be that they could score you internally on this, potentially creating an issue for a remortgage.

The Advance may be worth it for the monthly saver, effectively giving you a cheap mortgage, 'free' premium current account, paid for with the interest from the regular saver, even if it's just for a year.

CK

glocal

Thanks for the great tip! I hadn't realised their Regular Saver offers a preferential 6% for 12 months. As they say, if you save the maximum of £250 every month, it pays in interest £98 gross at the end of the year, which covers about half the annual fee for the Advance. In this case, the cost of my remortgaging drops to under £100. Considering that the standard booking fee is £999, this is not bad. Many thanks. I am wondering now if I could have done this 14 months ago when I paid £999 for my mortgage!

tigsly

I think for it to count as your 'current account' your wages have to be paid into it.

CKhalvashi

tigsly wrote: »

I think for it to count as your 'current account' your wages have to be paid into it.

Not necessarily.

As long as some money is flowing through each month, there shouldn't be too much of an issue.

CK

20vt-rs

I've had this with HSBC several times over the past 2 years, I originally took out a lifetime tracker and paid £499 fee for the rate (which was great at the time), however rates have gone down on these products and I have changed 4 times in the last 2 years.


From this, I have learnt that paying a fee isn't always worth it, so I have taken the fee free option on each subsequent change and not had to either shell out the fee or add to the mortgage.


You can go for their fee free product and still get a good rate (2.29%). Do the maths on your borrowing etc and see if this is worth it. Also think about if you may move to a fix or something else in the short term future, all has bearings on what you do, don't just go for the rate

pinkteapot

When comparing, do bear in mind that the booking fee is just one fee. You'll also pay a legal fee and valuation fee.

We're switching our tracker from Santander to HSBC in August and I've been trying to do the maths!

glocal

@tigsly, in my experience, when there is a requirement to pay money into a current account every month, you can typically transfer money in any way you like. You can also transfer the money back to where it came from a day later. In the case of the HSBC Advance there is no requirement to pay anything in, presumably because you pay a monthly fee. Let me know if you spot something there I may have missed.

@pinkteapot, the other fees involved in remortgaging apply when you move to another bank. I am getting exactly the same product with the same bank, so they did the valuation while on the phone based on estimates and they didn't mention legal fees. It may be because their earlier valuation is only 18 months old.

@20vt-rs, I've been thinking what if HSBC reduce their margin again soon. With four time in two years, you've been through this before me. I modelled for different scenarios and I think this is the appropriate product for me. I consider trackers a 'cleaner' product. Unlike most people, I consider fixed rate mortgages gambling.

Mokka

I opened a current account with HSBC to skip the high booking fee and was told that to count as a current account it must have a salary paid into it. It's been 3 months ago and did not see the Advance deal- is it new?

tigsly

I thought HSBC demands to have your salary in there - and I'm not sure about remortgages..

but - will new affordibility stuff - count on remortgages.. so where you have to show 3 months bank accounts.. wouldnt they class your HSBC account as your current account - and judge the amount you can borrow based on whats in there? So if you put £500 in - and then took it out the next day - it would appear you wouldn't have much money...

As for 'advanced members' you just pay - but it does cost £12 a month..

glocal

@Mokka, I am not sure how long the Advance deal has been around. I am surprised they said your salary must be paid into their standard current account. Banks demanding this state that explicitly in their blurb. HSBC just says £500 must be paid in every month, but there is no mention of salary. IME this means it can come from any source.

@tigsly, I have several current accounts with different banks, most of them dormant. I can show them the necessary statements to pass their affordability tests. In practice, it's a tick-box exercise. If the money comes in every month, computer (and contract) says yes. Advance costs you a fee, but it works out much cheaper than any booking fee over 12 months.