Mortgages form a fundamental part of the finances of the modern household. It provides the household with the funds required to purchase a property and the repayment usually takes place between 20 and 30 years. This depends on various factors such as age and affordability. When it comes to picking the best one, it's important that the consumer does a bit of homework on the different types of mortgages available, as there are special loan packages to take care of various needs. This review takes a look at HSBC Mortgages to determine whether it is a good fit for customers.
This bank was founded to strengthen global relationships, with a specific focus on strengthening Asia and Europe. The bank has been at the heart of financial matters and even infrastructure concerns since 1870.
Currently, the bank enjoys representation across the globe and have recently changed the branding of all their subsidiaries. Everyone now has the classic HSBC logo to improve customer identification with the brand. This is regarded as a megabank and services millions of customers across the globe.
For a full review on HSBC, read here.
The Basic Principles of a Mortgage Loan
There are a number of things potential property owners need to understand about mortgages, as they are more than just finance for a property.
The Property is the Security for the Loan
Some institutions request customers to put down a deposit or a means of security that is usually to the value of 10% of the property. However, customers are not to confuse this as security for the loan. In the mortgage agreement, there is usually a portion that stipulates that the property acts as security. This means that customers who do not keep to their loan agreements could face repossession of the property.
Loans Need To Be Paid On Time Every Time
A mortgage is a long-term agreement with a financial institution. Although the credit bureaus refresh their data every two years, it doesn’t mean that the financial institution itself does. This could affect future products customers wish to have with the institution. This may not mean a straightforward decline, but it could affect the rate of credit. Skipped or missed payments are one of the biggest contributors to low credit scores.
A Long-Term Commitment
Before signing up for the loan, it’s important that customers understand the terms of the agreement. For instance, they need to know whether the institution will charge them penalty interest on early settlements or additional payments. If they think they may have the means to do this, they should specifically look out for this ability when they shop around for the best deal.
A Good Rate Is Important
Even a small quarter of a percent will make a difference over the years, especially for the higher loan amounts. The best deal involves favorable interest rates, low monthly fees, and flexibility in terms of the repayments.
Automatic Insurance and Assurance
Customers often neglect to read the fine print of their contracts, which could leave them paying more than they should. If they already have the necessary insurances and assurances in place, there is no need for additional cover on the mortgage. Customers should review their statements regularly to check for unnecessary charges.
Factor in All the Costs
Many of the loan agreements don’t cover all the costs that customers incur at the attorneys or other ad hoc expenses, therefore, customers are encouraged to save a bit extra on top of their 10% deposit. The property could also require some extra furnishings or finished and a loan on top of the mortgage to cover this could cause financial constraints for customers in future.
The Option to Restructure
Financial situations change all the time and those who have a bit extra to put towards their mortgage should discuss in increased installment. This usually requires a new agreement to be drawn up but could save customers in terms of penalty charges for overpayments. Furthermore, customers who wish to pay in a lump sum should request a restructure that will lower their installment or reduce their term. This is if they are charged extra.
Transparent Rates, Fees, and Pricing
Customers who aren’t aware of the pricing or rates for the various stages and transactions on mortgages may face many disappointments along this long journey. Inception costs, monthly maintenance costs, penalties, and ad hoc charges on the mortgage account all add up. This could lead to a negative mortgage situation and if not monitored carefully, could spiral out of control.
HSBC Mortgages Categories
First Time Homebuyers
Customers who are new to mortgages will want to have a look at all the available options before deciding on their ideal mortgage. Some of the options include:
- Fixed Rate Mortgages
This option is suitable for those who want to know exactly what they’re paying every month for a set period. Their interest rate will not fluctuate with the markets and the conditions remain the same up until the agreed date.
- Tracker Rate Mortgages
This rate type follows the Bank of England base rate during the term of the mortgage. Furthermore, after the discounted rate period the mortgage will then revert to HSBC variable rate for the remainder of the term.
- Discount Rate Mortgages
With this mortgage type, customers benefit from a set discount off their Standard Variable rate for an agreed period. Also, this allows customers to have lower initial monthly payments.
This option is suitable for those who wish to access the funds that they’ve already paid off on their bond. Also, this option is suitable for those who had a fixed rate and now have to contend with a variable rate.
This option allows customers to transfer their current HSBC rate from one property to another. This takes place when customers buy and sell their properties simultaneously, and the transaction is known as porting. Finally, this type of agreement is subject to terms and conditions.
Buy To Let Mortgage
This option is suitable for those who wish to remortgage a Buy to Let property or purchase one. Furthermore, this option is suitable for those who are starting or expanding their property portfolio. Finally, customers have access to mortgages of up to 75% loan to value and the maximum Buy to Let limits apply.
This option is suitable for those who are already in the property market. There are options available for customers to switch their loans to HSBC, or borrow more on their existing loans.
For options on cover for the loans, read here.
What We Like About HSBC Mortgages
There the usual options available for customers who wish to have access to standard mortgage products. Those who are looking to enter the market or are in the market already will find a range of options that will meet their needs.
Customers have a variety of mortgage options to choose from that allow them to structure their loans to suit their needs.
Furthermore, the loan application process allows customers to choose a term from the bank’s range of options that will match their financial needs.
What We Don’t like About HSBC Mortgages
The information on the actual product pages is a little thin. Customers would need to know that they need to go back to the main page for mortgages to find out the rates and pricing schedules. Those who don't know that they should do this will have to go into a branch for further information.
Also, customers who wish to pay extra towards their mortgages will need to stick tho their limits. The mortgages have overpayment limits and customers who exceed theirs may need to pay a penalty fee. This does not encourage getting out of debt.
Read here to find out about other loan packages by HSBC.
Critical Reviews Ratings HSBC Mortgages – 6 of 10
The loans might be amazing and customers may have access to some amazing deals. Unfortunately, the information on the products is far too thin. If the information on the site is all there is, then the products are dull and dreary at the best.
Customers have access to stock standard options and HSBC takes no initiative to win customers over with amazing benefits for signing up to their mortgages. Some of the other institutions offer great deals on properties that have Green initiatives, there are building loan options and even options for those who can’t afford their own deposits but have family members who can.
Small initiatives like these go a long way. By ramping up their product range and giving customers more information on the options that are easy to find, HSBC might just win over a few more mortgage clients.
Finally, there is the sad reality that customers who wish to pay their mortgages off faster will have to face penalties. The bank places restrictions on the maximum overpayments allowed on their bonds, which hardly encourages a community that builds wealth and gets out of debt. This, unfortunately, indicates a “profit first” mindset.