Advice needed on current mortgage please

MikeRB_2

Hi,

I'm pretty good at most things involving money, insurance, gas, electric etc. But, mortgages have me stumped I'm afraid.

Back in 2005, my wife and I bought our first house and took an HSBC homestart mortgage. The loan is for £129,000 and we have been paying £536 for 24 months. This is on a fixed rate of 4.99%.

Yesterday, I received a letter reminding me that for the next 12 months, I'm going to be paying £726 at 6.75% on INTEREST only. This seems very high to me, but I have been looking around and it seems about right.

It also says that after 12 months, it will change to capital repayments at £866.

I'm in the process of selling my home, but this may not happen for a while as the market doesn't seem too good at the moment and I want to start paying off the capital now really.

Can anyone confirm if the above rates seem ok and if I should stick with HSBC, but call them to ask them to begin taking capital payments or if I should look elsewhere for a better deal.

I don't want to be tied in really as when I move, I don't think HSBC will give us the money we need.

Any advice and opinion would be much appreciated.

Jonbvn

Hi,

AFAIK, your HSBC home start mortgage will have significant early redemption charges (ERC's). This means that it may not be cost effective to remortgage, even if you could get a better rate. Suggest you have a look at your paper work to confirm.

MikeRB_2

Jonbvn,

Thanks for your reply. I checked and there are no ERCs. Just seems a lot to me. I guess as I've been used to paying 4.99%, then the 6.75% is a big increase.

If HSBC is fairly competaive, then I will stay with them but ask them to start taking repayments as opposed to the interest only charges.