HSBC low interest rate mortgage explained
Personal finance advice with Paul Gosling
Published 07/09/2009 | 10:36
Q. HSBC is offering a new, low interest rate, mortgage. What can you tell me about it? Is it for me? RS
A. HSBC has just launched a new mortgage product, with a headline rate of just 1.99%.
But while it looks good news, it is not relevant for most home buyers or home owners. It is only available for new house purchases — not for remortgages. And only people raising 40% of the property value from their own resources are eligible.
The offer from HSBC should come with warnings. Although the headline rate is 1.99%, this is not a fixed rate — but is based on a discount on its standard variable rate. This means that if HSBC raises its SVR, the rate on this mortgage rises too.
The discount only applies for two years, at which time borrowers should look again for the best deal.
The mortgage also comes with an initial £1,199 fee.