Re-mortgage when my first 2 year fixed rate end in December 2023.

tracyyi

I am a first time buyer in the year 2021, my mortgage is with HSBC fixed for 2 years, and going to end in December 2023 this year.

If I continue with HSBC, do I need to pay product fees of £999?
I check the "moneysupermarket", the best deal is still with HSBC

K_S

@tracyyi If the HSBC product that you are switching to comes with a £999 lender product fee, you will need to pay that or add it to the loan.

They should offer a no-fee version of the product as well, but that will come with a higher rate.

When picking between the no-fee and fee version, do make sure you are comparing the two on a total cost basis which takes into account the fees and the interest that you will pay over the fixed period.

tracyyi said:

I am a first time buyer in the year 2021, my mortgage is with HSBC fixed for 2 years, and going to end in December 2023 this year.

If I continue with HSBC, do I need to pay product fees of £999?
I check the "moneysupermarket", the best deal is still with HSBC

tracyyi

Mainly is £999 product fees, 
fixed for 2 years is not worth with £999 product fees.

Newbie_John

It does vary on the size of your mortgage. For example I can see now 2 year ones as 5.28% with £999 fee Vs 5.47% without fee.
The fee is about £42 a month for period of 24 months.

If your mortgage is 100k on 25 years then it's cheaper to go for free free.
If your mortgage is 500k on 25 years then you save about £15 a month.

Use mortgage calculator and compare.

simon_or

tracyyi said:

Mainly is £999 product fees, 
fixed for 2 years is not worth with £999 product fees.

If it's not worth it with fees, then take the product without fees. It'll be a higher interest rate though so do the numbers.

You don't get to not pay the the bank product fee if the product comes with one simply because you are a current customer.

amnblog

HSBC currently offer rates with no product fee or £999 product fee.

Whether it is worth taking the fee depends on the mathematics of your mortgage and your own feeling about debt and risk.

We don't know your loan to value. If it were 75% loan to value, the two year fixed rate is now 0.25% less on the fee charged product. You would therefore need borrowing of over £200,000 for the fee charged product to work for you.

On the five year fixed rates the difference is 0.14% so your mortgage would need to be over £150,000 to start to see any benefit on the fee charged product.

Bear in mind that HSBC work on a 180 day window to secure a new rate so talk to a good broker next month, or before.

amnblog

Newbie_John said:

It does vary on the size of your mortgage. For example I can see now 2 year ones as 5.28% with £999 fee Vs 5.47% without fee.
The fee is about £42 a month for period of 24 months.

If your mortgage is 100k on 25 years then it's cheaper to go for free free.
If your mortgage is 500k on 25 years then you save about £15 a month.

Use mortgage calculator and compare.

Using a mortgage payment calculator steers you in the wrong direction.

On a £500,000 mortgage the interest saved on the fee charged rate is 0.19% [example above], about £950 a year.

Over two years you may save close to £1,900 (a bit less to allow for capital decreasing). After the £999 fee you are £899 up equivalent to about £40 a month.