An Early Repayment Charge (ERC) applies to fixed rate mortgages. The ERC is calculated as 1% of the amount repaid early, above any annual overpayment allowance, for each remaining year of the period during which the ERC applies, reducing on a daily basis. However, (after taking your allowance into account) a maximum 5% of your overpayment will be charged.
Pay your mortgage off early:
An ERC is a charge you may have to pay if you repay the whole or part of your mortgage early. The ERC also applies if you switch your mortgage rate to another HSBC mortgage product.
You’ll have an annual overpayment allowance (AOA) to enable you to make additional payments during the fixed rate period without incurring an early repayment charge. The allowance is equivalent to 10% of the outstanding balance of your mortgage calculated on each anniversary of the start of your fixed rate period. Anything over this will incur an early repayment charge.“
Government schemes which can help you get a HSBC mortgage
There are lots of government schemes which may be able to help you geta a HSBC mortgage, they include:
Lifetime ISA– gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
Shared ownership– You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
Armed forces help to buy– similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
Rent to buy– This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
Right to buy– allows you to buy your home at a discount price.
Preserved right to buy- same as above.
Right to acquire- same as above.
Using a mortgage broker for a HSBC mortgage
You may want to consider using an independent mortgage broker to get a HSBC mortgage.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases. This could be over 11,000 mortgage products. This may have some advantages than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle. This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your remortgage is indeed a possibility before you make a full mortgage application. Once you have found a home you want to buy or are satisfied with the mortgage offer for your remortgage then the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer. Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it, they will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.
In this brief blog we discussed the HSBC mortgage rates. If you have any questions or comments please let us know.
John has 22 years of experience in financial services.
This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks.
While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale.
John has passed all three levels of the CFA (Chartered Financial Analyst) programme.