Remortgaging to release equity

starkiwi26

Dear all,

I bought my current house for about £150k 5 years ago with HSBC mortgage. My current outstanding mortgage is about £100k.

The current HSBC best mortgage rate is 1.74% (2-year-fixed rate LTV 70%, fee free), and I am happy to switch to this.

I noted on HSBC website, there are 2 options (Option a & b):
Option a) I can request to switch my rate to this 1.74%, and continue pay for my mortgage.
Question 1: Since I am still with HSBC, do I need new contract and procedures to change rate?
Option b) I can request to release equity. At LTV 70%, my property value is £150k, the mortgage will be £105k.
Question 2: Do this mean, I can get £5k cash pay into my account? Because this is perfect for my new kitchen.
Question 3: Do remortgage to release equity involve new contract and procedures (normally takes weeks or months)?

muhandis

1. If you stay with HSBC and merely switch products (no extra borrowing or change in term), it's should be a very simple process online, no affordablity checks, documentation, etc.

2 & 3. If you need to switch products AND increase borrowing, that will usually require advice which means affordability checks, documentation, etc.

Just FYI, if you stay with the same bank it's call a product switch/transfer. A remortgage is when you change lenders.

Good luck!

MortgageMamma

Its best to compare the costs/benefits of staying with HSBC to what is available on the open market. You'll have to undergo an affordability assessment either way, which will involve a Mortgage Adviser/Lender looking at your income and expenditure to see if you can afford the amount of borrowing required.

If you do a product transfer with no extra borrowing no checks are required.

There is also the option of doing a product transfer with HSBC and taking a secured loan (known as a second charge) for the additional amount you want to borrow - you can do this over a shorter term to get it paid off quicker.

It would be worthwhile you taking some professional advice on the matter.