HSBC mortgage will be an "all monies charge" - all debts become secured - normal?

pinkteapot

Posting in here rather than the Mortgages board as I think it's a question for the solicitors around here...

Remortgaging from Santander to HSBC. Just noticed this on the paperwork from HSBC's solicitor:

The mortgage security will be an "all monies charge". This means that the charge taken against your property will cover all and any debt you have with HSBC and it is not just limited to the amount of your mortgage debt. The debt may include overdrafts, loans, credit cards or money due under any facilities that HSBC has granted to you or grants you in the future.

:eek:

Am I right in thinking this isn't normal with a mortgage? We've previously had an HSBC mortgage (in fact, the same product we're applying for now) and I don't remember this clause, nor do I remember it being part of our current Santander mortgage.

Of course it's entirely possible that I didn't read the T&Cs properly previously and this has applied to all of our prior mortgages...

It's not a major problem as we currently have no debt apart from our mortgage. The obvious thing to do in the future, should we want to take out a personal loan or credit card, would seem to be to do so with a company other than HSBC.

What do people think? Is this normal or are HSBC sneaking it in to make all our debts (if we had them) secured?

Just to clarify, we simply applied to move our mortgage - we didn't apply for any sort of debt consolidation mortgage or anything...

davidmcn

pinkteapot wrote: »

Am I right in thinking this isn't normal with a mortgage?

No, it is normal these days. I'm not aware of any major lenders which don't say this.

In practice they are meant to advise you if they plan to treat any future borrowings as secured by their charge (and it seems unlikely that you'd be in such serious default on your other loans that the bank are considering repossession, without you also being in arrears on your mortgage anyway).

pinkteapot

Oops. We've only had our Santander mortgage for six months, so it's probably the same then. Shows how well I read all the paperwork.

I honestly thought that secured debts and unsecured debts were completely separate, and that when applying for a new debt it would be clear that it was a secured one (if applicable). I've learnt something today!

As I said, obvious way round it seems to be to take on any future debt (not that we're planning any) with companies unrelated to HSBC.

davidmcn

pinkteapot wrote: »

I honestly thought that secured debts and unsecured debts were completely separate, and that when applying for a new debt it would be clear that it was a secured one (if applicable).

As I said, in practice the terms of any new loan should say whether they are using the existing charge as security for it. Bear in mind that secured debts are cheaper!

Mokka

My solicitor made me aware that HSBC mortgages are different in another respect- they can take your savings to cover your mortgage payments shortfall, should it occur. Apparently this is specific to HSBC mortgage and not other lenders have this clause. Of course the question is why would you fail to pay for your mortgage if you have savings.

pinkteapot

Yep - it shouldn't ever be an issue for us but worth knowing, thanks mokka. We have some of our savings with HSBC but if we ever get in trouble we'll move them.

silvercar

pinkteapot wrote: »

Yep - it shouldn't ever be an issue for us but worth knowing, thanks mokka. We have some of our savings with HSBC but if we ever get in trouble we'll move them.

In practical terms, if you ever got into trouble you probably wouldn't have savings.

The time to be careful is if you have given personal guarantees for business loans and then take a mortgage with the same company.

pinkteapot

Fair point! Neither of us is self-employed, nor involved with small companies, so that shouldn't be an issue either.

This has all been an eye-opener though as I thought mortgages were ring-fenced from your other finances (unless you file for bankruptcy). Learnt something.

In good news though, remortgage is set for completion on the 25th - only 2.5 weeks after we applied! Same product as we had with Santander (lifetime tracker) but 0.5% cheaper. :money:

Annoyingly HSBC wouldn't lend to us when we moved six months ago, despite having banked with them for 15 years and the mortgage on our last house being with them, but Santander would (at a higher rate). My job was a two-year contract and HSBC don't do contractors. I was made permanent before we even exchanged contracts. :mad: On principle, I didn't want to go back to HSBC because they annoyed me, but given the saving we'll make I'm not about to cut off my nose to spite my face.

chockydavid1983

Thanks to everyone who contributed to this thread, I'm in the exact same position remortgaging with HSBC from Bank Of Scotland and noticed these clauses.
Definitely an eye opener in terms of secured/ unsecured loans, I definitely won't be getting a HSBC credit card that's for sure!