5 Year Fixed Rate Mortgage @ 1.99%, Max LTV 60% £1999 Booking Fee @ HSBC
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5 Year Fixed Rate Mortgage @ 1.99%, Max LTV 60% £1999 Booking Fee @ HSBC

£1,999HSBC Deals
28
Found 29th Dec 2015
5 Year Fixed @ 1.99%
Max LTV 60%
£1999 Booking Fee

I understand the booking fee is very high, so this makes only sense when you borrow larger amounts.

Suppose you borrow 200k, then the booking fee is equivalent to 1%, spread over 5 years roughly 0.2% p.a., so this would be similar to 2.19% fixed for 5 years without booking fee (and even lower for larger amounts).
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You can't convert the fee into a percentage to compare to other rates. That just gives a false comparison. if I was borrowing 1.5 million would you equate that booking fee to a ridiculously low interest rate mortgage?
fireman1

You can't convert the fee into a percentage to compare to other rates. … You can't convert the fee into a percentage to compare to other rates. That just gives a false comparison. if I was borrowing 1.5 million would you equate that booking fee to a ridiculously low interest rate mortgage?



Using a comparison with a £200k loan is quite sensible and helps explain to those put off by the seemingly high fee. It's sad but while some people seem to know exactly what good value is when it comes to a pack of doughnuts or a games console they are incapable of simple calculations to compare mortgage costs. I thought this was a helpful example from the OP.

HSBC have consistently offered good rates for credit-worthy borrowers. This is a good deal for some people
aarontag

However, if you're lending large amounts and are squeaky clean then not … However, if you're lending large amounts and are squeaky clean then not bad.


Oh dear, a mortgage adviser who doesn't know the difference between lend and borrow. oO
It works our more like a 2.49% rate with no fee based on £200k and over the 5yrs not the full term.
I guess it can get quite expensive to be adding product fees on every few years
Original Poster
ianj9375

It works our more like a 2.49% rate with no fee based on £200k and over … It works our more like a 2.49% rate with no fee based on £200k and over the 5yrs not the full term.I guess it can get quite expensive to be adding product fees on every few years



How did you calculate 2.49%?
Daywalker04

How did you calculate 2.49%?


Incorrectly.
They also offer a no fee version of this mortgage which is excellent value.
Original Poster
I'm really surprised how cold this gets, especially after the last post with 2.19% fixed +499 booking fee (exclusively for Premier and Advance) got so hot.

I understand that this deal does not suit everybody, maybe you don't want to fix for 5 years or you only have a 'small' amount to borrow.

But can anyone of those voting cold please show a better deal for >£150k 5 years fixed?
Daywalker, you have a first deal with 60% LTV making a property value of £333,333, based on your 200K example, with an average UK house price of 286K your probably limiting the people this is beneficial to. Your second offer is for premier and advance customers. Again limiting the usefulness to most. Easiest way to get a cold deal is get someone excited about a possible saving on anything only to find its not available to them!!
Toob

Daywalker, you have a first deal with 60% LTV making a property value of … Daywalker, you have a first deal with 60% LTV making a property value of £333,333, based on your 200K example, with an average UK house price of 286K your probably limiting the people this is beneficial to. Your second offer is for premier and advance customers. Again limiting the usefulness to most. Easiest way to get a cold deal is get someone excited about a possible saving on anything only to find its not available to them!!


Maybe there should be a separate "only for the majority" section where people incapable of deciding whether a deal is relevant to them or not can go in safety?
The way to work this out is to calculate what your total outgoings are over the 5 years.

Monthly payment for 1.99% equals £1058 / 60 payments total £63480
Monthly payment for 2.19% equals £1083 / 60 payments total £64980

On a loan amount of 250k, you would pay the same in 60 repayments @1.99% interest and a fee of £1999 as you would for 60 repayments @2.19% interest and a fee of £499.

Both calculations total £65479
Original Poster
SomebodE

The way to work this out is to calculate what your total outgoings are … The way to work this out is to calculate what your total outgoings are over the 5 years.Monthly payment for 1.99% equals £1058 / 60 payments total £63480Monthly payment for 2.19% equals £1083 / 60 payments total £64980On a loan amount of 250k, you would pay the same in 60 repayments @1.99% interest and a fee of £1999 as you would for 60 repayments @2.19% interest and a fee of £499.Both calculations total £65479



I agree with the first part, but not with the calculations. For a 250k loan 1.99% would result in an annual interest charge of £4975, with 2.19% that's £5475. So you pay £500 less in interest p.a., £2500 over the 5 year term. Subtracting £1500 higher fee leaves you £1000 better off with this deal.
ewanyengi

Maybe there should be a separate "only for the majority" section where … Maybe there should be a separate "only for the majority" section where people incapable of deciding whether a deal is relevant to them or not can go in safety?


Cracking Idea - time and time again people think this site is driven by reason rather than emotion, ironic isn't it
Daywalker04

I agree with the first part, but not with the calculations. For a 250k … I agree with the first part, but not with the calculations. For a 250k loan 1.99% would result in an annual interest charge of £4975, with 2.19% that's £5475. So you pay £500 less in interest p.a., £2500 over the 5 year term. Subtracting £1500 higher fee leaves you £1000 better off with this deal.



Whether you agree with them or not, the figures were taken from HSBC's calculator at hsbc.co.uk/1/2…tor

Given we're talking about two HSBC rates, I think it's fair to say that the figures I've presented are more than likely a correct view of what you'd pay for a HSBC mortgage.

Either way, it's better to take a conservative view than an optimistic view about what the break even point is.

Worth noting also that we're perhaps talking cross purposes - I'm talking about total "out-goings" and you're talking about "interested accured", which matters at the end of the 5 years when you switch deals or how quickly you pay off your mortgage.

Also worth noting that without fees, the difference in interest (provided the rate is constant) over 25 years is £7,348 - again, using HSBC's calculator

Edited by: "SomebodE" 30th Dec 2015
SomebodE

The way to work this out is to calculate what your total outgoings are … The way to work this out is to calculate what your total outgoings are over the 5 years.



Incorrect - your calculations only look at repayments BUT do not take into account the fact that the total amount outstanding at the end of the 5 year period is lower with the lower interest rate.

Edited by: "marathonic" 3rd Jan 2015
SomebodE

Either way, it's better to take a conservative view than an optimistic … Either way, it's better to take a conservative view than an optimistic view about what the break even point is.



Why do you need to take any view - there is no guesswork in calculating the breakeven point given that these are fixed rates. You don't need to take any view, just calculate correctly.
marathonic

Why do you need to take any view - there is no guesswork in calculating … Why do you need to take any view - there is no guesswork in calculating the breakeven point given that these are fixed rates. You don't need to take any view, just calculate correctly.



The reason to take a convervative view is simple... if you're promised 3 sweets and you get 2 sweets, you're disappointed. f you're promised 2 sweets and you get 3 sweets, you're happy at the unexpected gain.

You have to take a view because no one can accurately say what the interest rate after 5 years will be so you take a 25 year view to see what the difference in interest is over 25 years - it's relatively small so the interest difference at 5 years is going to be smaller. Thus the calculations according to HSBC (who are offering the deal) are correct.

I'd like to see something from you to the contrary that's underwritten by HSBC... many thanks.


marathonic

Incorrect - your calculations only look at repayments BUT do not take … Incorrect - your calculations only look at repayments BUT do not take into account the fact that the total amount outstanding at the end of the 5 year period is lower with the lower interest rate.



Read my comment - I've shown the difference in total interest charged over 25 years if the two rates are constant.

Edited by: "SomebodE" 4th Jan 2016
SomebodE

The reason to take a convervative view is simple... if you're promised 3 … The reason to take a convervative view is simple... if you're promised 3 sweets and you get 2 sweets, you're disappointed. f you're promised 2 sweets and you get 3 sweets, you're happy at the unexpected gain.You have to take a view because no one can accurately say what the interest rate after 5 years will be so you take a 25 year view to see what the difference in interest is over 25 years - it's relatively small so the interest difference at 5 years is going to be smaller. Thus the calculations according to HSBC (who are offering the deal) are correct.I'd like to see something from you to the contrary that's underwritten by HSBC... many thanks.Read my comment - I've shown the difference in total interest charged over 25 years if the two rates are constant.



HSBC calculators do not show amortisation information so we're left to do the calculations ourselves. With that in mind, I'm not going to be able to show you calculations which are backed up by anything quoted on the HSBC calculators.

I could show calculations based on other websites that DO show the amortisation tables - other websites that aren't actually tied to any specific bank.

I might do that later if I get the time and no one else has already shown them.
Edited by: "marathonic" 4th Jan 2016
SomebodE

The reason to take a convervative view is simple... if you're promised 3 … The reason to take a convervative view is simple... if you're promised 3 sweets and you get 2 sweets, you're disappointed. f you're promised 2 sweets and you get 3 sweets, you're happy at the unexpected gain.You have to take a view because no one can accurately say what the interest rate after 5 years will be so you take a 25 year view to see what the difference in interest is over 25 years - it's relatively small so the interest difference at 5 years is going to be smaller. Thus the calculations according to HSBC (who are offering the deal) are correct.I'd like to see something from you to the contrary that's underwritten by HSBC... many thanks.Read my comment - I've shown the difference in total interest charged over 25 years if the two rates are constant.




Regarding the sweets analogy, if this is the view you're taking, you may be advised to go see a mortgage broker. The correct view is to calculate everything over the 5 year term, during which everything is fixed, and reevaluate after 5 years with the view to, perhaps, remortgaging. This takes the guesswork completely out of it.
marathonic

HSBC calculators do not show amortisation information so we're left to do … HSBC calculators do not show amortisation information so we're left to do the calculations ourselves. With that in mind, I'm not going to be able to show you calculations which are backed up by anything quoted on the HSBC calculators. I could show calculations based on other websites that DO show the amortisation tables - other websites that aren't actually tied to any specific bank.I might do that later if I get the time and no one else has already shown them.




From Karl's Mortgage Calculator for borrowing 250k over 25 years at 1.99%:
Monthly Repayment: 1058.42
60 repayments total: 63505.2
60 payments plus 1,999 fee: 65504.2
Balance at the end of 5 years (after 60th monthly payment): 209,417.98

From Karl's Mortgage Calculator for borrowing 250k over 25 years at 1.99%:
Monthly Repayment: 1082.91
60 repayments total: 64974.6
60 payments plus 499 fee 65473.6
Balance at the end of 5 years (after 60th monthly payment): 210,302.62

Difference between 60 payments and fee: £529.60 less with 1.99
Difference between the two balances after 5 years: 884.64

It's not the annual you're claiming, given you're suggesting changing deals every 5 years, which will incur some sort of fee for the best rates. It will also be easier to get the 2.19% deal for most people based on income and out-goings regardless of how clean their credit history is.

What you have said does not hold water and you've offered nothing to back up what you have said in either raw numbers or external sources. I can thus conclude that you're arguing for the sake of arguing rather than on any sort of merit or for the benefit of consumers.

So it begs the question... don't you have anything better to do than pedal false information?


Edited by: "SomebodE" 7th Jan 2016
SomebodE

.So it begs the question... don't you have anything better to do than … .So it begs the question... don't you have anything better to do than pedal false information?



I love it... May I direct your question right back at you?

Your original calculation suggested no difference overall financially between the two options. This is not the case. Using the same calculator as you used, and assuming you require £250,000 over 25 years (you're usually best adding the fee to the mortgage for these calculations in order to avoid complex calculations related to interest on the additional fee that could have been used to pay off some of the mortgage balance on the product with the lower fee):

1.99% with £1,999 fee:
£251,999 initial balance
£64,012.80 total repayments (£1,066.88 * 60)
£211,092.49 balance remaining

2.19% with £499 fee:
£250,499 initial balance
£65,104.20 total repayments (£1,085.07 * 60)
£210,722.39 balance remaining

The lower rate means £1091.40 less in repayments and a £370.10 higher balance so the lower rate results in an overall saving of £721.30.

After the five years, both products go onto the same interest rate.
marathonic

I love it... May I direct your question right back at you?Your original … I love it... May I direct your question right back at you?Your original calculation suggested no difference overall financially between the two options. This is not the case. Using the same calculator as you used, and assuming you require £250,000 over 25 years (you're usually best adding the fee to the mortgage for these calculations in order to avoid complex calculations related to interest on the additional fee that could have been used to pay off some of the mortgage balance on the product with the lower fee):1.99% with £1,999 fee:£251,999 initial balance£64,012.80 total repayments (£1,066.88 * 60)£211,092.49 balance remaining2.19% with £499 fee:£250,499 initial balance£65,104.20 total repayments (£1,085.07 * 60)£210,722.39 balance remainingThe lower rate means £1091.40 less in repayments and a £370.10 higher balance so the lower rate results in an overall saving of £721.30.After the five years, both products go onto the same interest rate.



I applaud you for coming back with figures - it's much better than hearsay or word based speculation.

What you've shown is that you're not better off not adding the fee to the mortgage as you end up paying interest on that sum also. Some people might do this regardless due to their financial position but it's variable that needs a personal "view" (... in quote because you've previously stated/asked why someone would need to take any view).

Your preference is to add the fee to the loan, where as I wouldn't dream of paying interest on a fee as it increases my cost base over the 25 years. I did add it to the loan with my first mortgage and remember seeing the first statement showing 25 years of equal payments against it so it was promptly paid off and I've never done that since.

What this activity has shown is that using the same calculators, different "views" yield different results and these "views" are to do with preferences, even with the same headline variables.

It's worth noting that the £1999 fee is a non-refundable booking fee and so you may be asked to pay this in advance rather than being allowed to add it to the mortgage - it's at the bank's discretion and for aggressive or market leading deals, there's more chance of it being asked for in advance - I don't think this is a bad thing personally.

My previous calculation using the HSBC calculator removed many variables to keep it simple. I had also assumed the same rate of interest as a constant to keep things simple even though they switch to the same rate after 5years.

Ultimately HSBC are underwriting the mortgage and so what they say counts regardless of what either of us speculate at online.



Edited by: "SomebodE" 8th Jan 2016
SomebodE

What you've shown is that you're not better off not adding the fee to the … What you've shown is that you're not better off not adding the fee to the mortgage as you end up paying interest on that sum also. Some people might do this regardless due to their financial position but it's variable that needs a personal "view" (... in quote because you've previously stated/asked why someone would need to take any view).Your preference is to add the fee to the loan, where as I wouldn't dream of paying interest on a fee as it increases my cost base over the 25 years. I did add it to the loan with my first mortgage and remember seeing the first statement showing 25 years of equal payments against it so it was promptly paid off and I've never done that since.



The addition of the fee is done merely for the calculations. Look at this another way, I have a limited amount of cash available and need a mortgage for the rest.

Let's say I've got £100,000 and need an additional £200,000 to purchase my house.

My options are to get a £200,499 mortgage and go for the product with a £499 fee or get a £201,999 mortgage and go for the product with a £1,999 fee.

Your suggestion is to pay the fee upfront - but surely if I have £1,999 set aside, then it just changes the calculations slightly, i.e. I've really got £101,999 and need an additional £198,001 to purchase my house.

The fee has to come from somewhere and, having to pay it means that you have to borrow more - regardless of whether the fee comes from savings or higher mortgage borrowings.
Edited by: "marathonic" 8th Jan 2016
Are fixed rate mortgages the best to go for right now, or totally dependant on your personal circumstances?
I just called HSBC who advised 1.99% rate is only available for existing HSBC mortgage customers. Best rate (for their current account holder) is 2.09%.

Also you'll be lucky getting on their website. I haven't been able to use it for 2 days
bbc.co.uk/new…632
An interesting article that predicts interest rates are not going to rise until 2019, with possibly a cut this year: http://www.telegraph.co.uk/finance/personalfinance/interest-rates/11032396/Interest-rates-predictions-When-will-the-Bank-Rate-rise.html

May be better with a short-term tracker and then fix in a couple years time. Barclays have a 2 yr offset tracker at 1.49% above base rate (1.99%) with a £999 fee and 75% LTV. Depending if you want to roll the dice


Edited by: "mikeyp" 15th Feb 2016
I'm still saving for my deposit, but I'm also renting at the same time, but I'm not sure if I would like to live in the UK forever so I could help me with two questions:
1. Does getting a 5 year deal means a higher monthly repayment than say 10 year? What happens after 5 years for this one? Do I have to find another mortgage to pay HSBC?
2. What if I want to sell my property?
Cheers,
gemignani

I'm still saving for my deposit, but I'm also renting at the same time, … I'm still saving for my deposit, but I'm also renting at the same time, but I'm not sure if I would like to live in the UK forever so I could help me with two questions:1. Does getting a 5 year deal means a higher monthly repayment than say 10 year? What happens after 5 years for this one? Do I have to find another mortgage to pay HSBC?2. What if I want to sell my property?Cheers,



1. No, generally the 10 year deals have a slightly higher interest rate. Call it a 'premium' for peace of mind. After the 5 years have lapsed on this one you would go onto their standard variable rate if you didn't remortgage or pay the remainder off.

2. Most mortgages are portable, so as long as you buy another property you should be okay. Either way this should be explained in the key facts for the mortgage.
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