HSBC remortgaging with two mortgages

LeeLondon_3

Hi, 
We have two separate mortgage accounts with HSBC as we ported our mortgage and then they drew down another mortgage when we moved to our current home. As such they run at different deal lengths. The first mortgage of £166k is currently at 2.29% and ends Feb 2021, thereafter it will be 3.54% variable. The second mortgage is for £288k and is at 1.84% until September 2022. The house is valued at £720k to £750k.  I am currently looking at remortgaging the first mortgage to a new fixed deal and I assume this will have to be with HSBC as we can't have two separate mortgage providers on the same property.  Rates for a 5 year fixed 60% LTV (which we should just about make come Feb 2021) are 2.19% (no fee) 1.64% (£999 fee) and 1.61% (£1499 fee)

At some point I'd like to bring both mortgages together so as to not be doing a remortgaging every 2 to 3 years and paying out mortgage fees, this will also give more options to shop around. I thought I'd ask the MSE community what would be the best approach:

• Do a 2 year fix on the smaller mortgage to Feb 2023 but then pay an early repayment charge and remortgage the whole amount in Sept 2022.
• Leave the mortgage that runs until Feb 2021 to go on to the variable rate and then remortgage the whole amount in Sept 2022.

Or we can continue to have two mortgages. Renewing each to fixed deals as and when they come up for renewal.

Salemicus

You also have another option, which is to do a 2 year fix on the smaller mortgage to Feb 2023, then leave the larger mortgage on the variable rate until Feb 2023, then remortgage the whole amount (no ERC).
I would think about it in terms of costs - interest and fees. Let's do a rough calculation of the various options:

Option 1:
Remortgage the small mortgage at a 2-year fixed. The 1.64% deal is the best one for you. On the small mortgage, you pay £5172 in interest and fees, then £1392 Early Repayment Charge (charge is 1%, but only applies to 90% of remaining balance). Total of £6564.
On the large mortgage you pay £8128 in interest.
Then you get a combined mortgage of £423k (where the 1.61% deal is best for you). Over the first 5 months that costs you £2822 in interest.
Total cost: £17514.

Option 2:
Over the 19 months at the standard VAR, the small mortgage costs you £9060 in interest payments.
Other costs are the same.
Total cost: £20010

Option 3:
Remortgage the small mortgage at a 2-year fixed. Again, the 1.64% deal is best for you. You pay £6221 over the term in interest and fees.
On the large mortgage you pay £8128 interest over the first 19 months, then £3941 interest over the remaining 5 months.
Total cost: £18290

So based on these rough-and-ready assumptions, your best option is the first one. But if you like the HSBC deal, maybe you could ask them if you could merge your mortgages in February 2021 without paying an ERC on the larger mortgage. They may be willing to go for that, you never know.

Some assumptions:

• 20-year term remaining on your mortgages.
• Mortgage rates don't change substantially in the interim.
• Note HSBC's rates and fees for a 2-year fix are rather different to the 5-year fixes but they don't much change the calculation.
  

Thrugelmir

For clarification you have 2 loan accounts linked to the same mortgage. The mortgage being the legal deed registered against the property to secure the debt. 

Fixing for 5 years at a time, would reduce the amount that you would need to pay in product fees (if applicable ) to HSBC. Run the options through a calculator such as MSE provide to determine your best options.

Remortgaging to a new lender may add another layer of costs to the equation. 

LeeLondon_3

Thanks very much for your help. I agree that Option 1 looks to be the best option, we'll also speak to HSBC to see if we can combine the larger mortgage without paying the ERC - like you say, it's worth trying.

arif50

Can someone clarify if the below statement from the op is correct?

"I am currently looking at remortgaging the first mortgage to a new fixed deal and I assume this will have to be with HSBC as we can't have two separate mortgage providers on the same property."

I am in a similar situation and wondered if it is possible to move one mortagage to one provider, and keep the other with HSBC.

dimbo61

That would be a second charge with the New lender and not going to be cheap.
HSBC would also have to agree to this so unlikely to happen

[Deleted User]

Don't hsbc do any tracker mortgage deals that will allow you to leave at the point the other becomes available with no penalty? 

IAMIAM

This is one of the drawbacks with HSBC, they have trackers that have £999 fees. The only two lenders I know are Nationwide and First Direct who have fee free trackers to jump onto until mortgage accounts are aligned date wise again

LeeLondon_3

I thought I'd come back to this post as the it's time to remortgage again. I went for Option 1 from above and these are current balances:
Mortgage 1: 159.5k. 1.79%. Ends Feb 2023
Mortgage 2: 278k. 1.84%. Ends Sept 2022

As before, I'd ideally like to bring align the end dates so that eventually I can remortgage them together.

Options I'm considering:

Option 1
I could remortgage both today and try to beat Thursdays predicted rate rise. Paying early repayment charges on both. I think this would be £1500.

Option 2
Remortgage Mortgage 2 from 2nd July to secure a rate for when fixed rate ends September 2022. No early repayment charge on Mortgage 2. Remortgage Mortgage 1 at the same time and pay an early repayment charge - approx £1k

Option 3
Allow Mortgage 2 to go to variable and then remortgage both in December. Given how rates are heading this feels quite risky but would not incur any early repayment charges.

Option 4
Give up on aligning them(!) and remortgage both when they come up for renewal.

Current HSBC 5 year 60% LTV rates are:
No fee 2.89%
£999 fee 2.64%
£1499 fee 2.61%

but looks like these will be going up. Any help once again much appreciated!

LeeLondon_3

I now have a mortgage offer for 2.64% which is valid until 28th June.

So I can either accept that or wait until 3rd July to set up the remortgage on Mortgage 2. This would mean no early repayment charge of £730. but at an interest rate of 2.94%.  I'm thinking that it would be worth paying the early repayment charge of £730 for the lower interest rate as over the 5 years the additional interest would be £4k.

The early repayment charge on mortgage 2 will be £1k but again, give that interest rates may be even higher for February 2023 I'm inclined to also pay this to lock in 2.64% interest for 5 years. This would also mean that both mortgages have a fixed term that ends Oct 2027.

Again, any thoughts on this much appreciated. Thanks