Have HSBC ERC recently changed?

PrincessLou

Hi all,

Just been on my online banking and noticed that HSBC seem to have changed their ERC terms. Anyone know anything about this?

We are currently in the middle of a 2 year fix but as per the previous rules, started paying the maximum of 10% of the monthly payment allowed.

I logged on today to see that we now have a yearly allowance that we are allowed to overpay of £11792. Does this mean that the previous rules of 10% of monthly payment no longer apply?

Thanks for any replies in advance!

kingstreet

10% of monthly payment?

Are you sure? 10% of outstanding balance each year would be more usual.

PrincessLou

Yes, that was the rule previously. However, I've just looked in my messages in online banking and it's true, the rules have changed and it's now 10% allowance per year which is fantastic news. :j:T

Obsidian1980

Hi PrincessLou

Same here, I also logged onto my HSBC online banking yesterday and noticed something hinting at an altered maximum over-payment scheme.. I'm currently paying the 20% extra on top of my minimum/standard monthly payments.

I've just been off the 'phone' (Skype) and they've told me that yes, they've altered their over-payments. You can now over pay by 10% of your outstanding balance, per year. I'm currently 1 year into a fixed-rate deal. So if you had a remaining balance of £115,000 for example, you could over pay by £11,500 per year (£958.33 per month extra).

You will probably find the cut-off date for your annual over-payment corresponds with when you started your mortgage (bit like car insurance I suppose).. I forgot whether she said if that was a particular date (e.g. 18th), or the end of the month.

The advisor told me that many people have phoned up in the last few days with similar questions, but apparently letters are currently being sent out, so hopefully we'll expect a letter with frequently asked questions included!

I hope this has been helpful!

Chris.

kingstreet

Obsidian1980 wrote: »

So if you had a remaining balance of £115,000 for example, you could over pay by £11,500 per year (£958.33 per month extra)

Just as an aside, it would be £11,500 only in the current year.

In future years, the outstanding balance will be lower, so it will be 10% of a lower amount.

Just clarifying that for future readers.

Nationwide allows overpayment of 10% of the original mortgage amount, so that would remain the same amount each year for the term of the mortgage.

Obsidian1980

Yes, with HSBC it's 10% of your 'remaining' mortgage balance per year. Much better than their previous 20% on top of your monthly payment.

Happy days