Newbie question re: HSBC mortgages

queen_d_2

Hi,

Over the past few days my boyfriend and I have been ringing round various mortgage companies and found HSBC offers us the highest mortgage amount; £130k.
We are both UK graduates aged 23.

My question is does anyone have any advice on what kind of deal to accept i.e. fixed rate, variable rate for 2,3,4, years etc. The mortgage would be over 25 yrs. With the market in its current state we are totally bewildered with all the various interest rate options offered by HSBC.

Thanks for any advice.

Marie

herbiesjp

I would be surprised if they were offering the best deal - not normally top of the best buy tables.

queen_d_2

I didn't say they offered the best deal - they offer the highest amount. All other lenders base it on the prehistoric 2.75 x your combined salaries etc while HSBC base it on your actual ability to pay, so therefore they offer a much higher amount than other lenders.

Anyway back to my actual question, does anyone have any advice on what repayment structure to pick? I know its a gamble with any of the options because you can't predict what the interest rates will be but does anyone have any advice from their own experience.

Thanks

herbiesjp

Sorry - by best deal I did mean in terms of mortgage amount agreed.

There are other lenders that will probaly go as high, if not higher, but also offer better rates at the same time.

It really does depend on your budget and what the figures look like on each scheme. If you have an illustration for the schemes, it should show you what a 1% rise in interest rates could do to your payments. If you have a tight budget and need the security then fix, if you want to take a bit of a gamble with some varaiable rates, then make sure you factor these figures into the decision making process.

m00

We are also both grads albeit a year older than you when we bought this time last year. We went with a 3 year 125K fixed repayment mortgage that HSBC were offering. In hindsight I dont think I'd ever fix for three years again as rates have fallen and I think my fix at 5.69 is very high but you live and learn! Maybe a two year fix would have been better, would only have a year left instead of 2. I will be leaving HSBC as soon as possible, as thier current account is not flexible enough for me and going into a branch when they are actually open on a weekend is nigh on impossible.

I guess it pretty much depends on how much you can afford and how well you budget money together. I think we budget really well and manage to do ok even though at the time our combined gross income was £40k but because Im a training professional my salary increments quite rapidly so we took a chance. Also please remember that fees/stamp duty etc can cost so budget for those, we spent about £5k for bits and pieces inclding these.

best of luck

Can I ask which region you are buying in?

KTF

Have you consulted a broker of have you picked this HSBC deal yourself? As others have said, there might be better deals out there than the ones that HSBC are offering.

meanmachine_2

queen_d wrote:

I didn't say they offered the best deal - they offer the highest amount. All other lenders base it on the prehistoric 2.75 x your combined salaries etc while HSBC base it on your actual ability to pay, so therefore they offer a much higher amount than other lenders.

You do have a lot to learn.

Yes, silly banks not giving you twenty times your salary. Tut tut.

It won't seem so prehistoric if you suddenly fall pregnant or your partner falls ill.

And you're doing the wrong thing by ringing around. You're on the net - use it. Or go see a broker.

Or else wait until you're earning more money. Meantime save.

Sput2001

Definitely go see a broker or an ifa. Quite often the best deal for you isn't available "over the counter", so to speak.

queen_d_2

Thanks herbiespj, m00, KTF and Nick. (Who rattled meanie's cage?!)

m00 - in answer to you're q we're buying in the northeast of England.
It's helpful to know other people's experiences, I myself am a part-qualified professional so I know in a few years we don't have anything to worry about but at the beginning you don't want to get stuck into a deal that's too wasteful.

Thanks for your advice.

meanmachine_2

Mean by name...

I'm just saying, these "prehistoric" rules are there for a reason.

If you wish to ignore them because you know better, then that's your lookout.

Just be aware that circumstances change and you don't want to be lumbered with a huge mortgage when only one of you is earning.

I know the government tells us there will never ever be another recession and house prices only ever go up, but not so long ago things were very different.

Good luck though..and I'll go back into my cage now.