First Time Buyers: Get some help from HSBC...

RubberDucky_3

HSBC is offering a helping hand to first-time homebuyers worth more than £4,800 per person.

It is giving them the chance to pay interest only for the first three years of the loan. This will more than offset their buying costs such as solicitor's fees and stamp duty.

HSBC's HomeStart mortgage can reduce the monthly mortgage bill by around £134 per month in the early, expensive years of the loan. Customers can choose from a variable rate (currently 5.75 per cent and guaranteed never to be more than one per cent above base rate), a new two-year fixed rate at 5.49 per cent, or a new three-year fixed rate, also at 5.49 per cent. For its existing customers HSBC will also pay the standard valuation fee, worth an average of £140, and offer 10 per cent off home insurance and a gold credit card.

RD

payless

For cases above 90% ltv those rates are competitive, but below 90% much better deals eslewhere

It is giving them the chance to pay interest only for the first three years of the loan. This will more than offset their buying costs such as solicitor's fees and stamp duty.

It does not offset other bills, just means you loan not repaid as quickly

christoff07

This mortgage looks really good - I've been on their website and the repayments would work out really good for my situation.

What's the catch???!!!

payless

interstr only means - not repaying the debt, only the interest, so
for example
(assuming same rate thro' the whole mtg, and over total 25 yrs)

£100K at 5.49% 25 ty repay mtg
£613.49pm

OR on the initial I/O option
3yrs at £457.50 (int only) followed by 22 yrs (repay) at £653.27pm

thats almost £5000 extra over term

plus more chance of being caught in neg equity in early years

EMcG

I have one of these Homestart mortgages from HSBC.

Basically, it is, in effect two mortgages - first a 3 year interest only mortgage (so you mortgage balance doesn't come down) then a 22 year repayment mortgage. You pay off your balance over 22 years instead of 25 - so payments are a bit higher. I suppose it also counts as a tracker as it is always 1% above BoE base rate.

I have to say when I took this out in Feb.2002 it was the only way that I could have got on the property ladder.

This mortgage coupled with the fact that I was a (very old) graduate (and therefore HSBC offered me a larger mortgage) meant that despite earning only 20K at the time I was able to buy a house for 79k and have low(ish) mortgage repayments for three years.

Now almost three years on the house is worth 140k and my mortgage payments are £378 p/m. This will rise to £528 next Feb. when the deal ends. I will then be off to a different lender.

So, all in all, it has been an excellent way to get a house and keep the costs low for the first few years. But I can't see many people staying with it once past the initial 3 years.

Just be aware that whilst the first three years are cheaper you will pay for them over the entire length of the mortgage.