HSBC is a multinational banking and financial services company, headquartered in London. Its U.S. subsidiary operates from New York City, and it offers banking and other financial services in all 50 states, including a home equity line of credit.
HSBC’s HELOC comes with competitive interest rates and low costs, but it may be difficult to get approved if your credit isn’t in excellent shape.
If you’re thinking about getting a HELOC from HSBC, here are a handful of lender highlights to consider before you apply:
- The lender offers a home equity line of credit, which it calls a Home Equity Line of Choice, in all 50 states.
- You can borrow up to $350,000 if you’re an Advance or Personal banking customer, and up to $1 million if you’re a Premier customer. There is no minimum draw amount for most states. In Arizona, the minimum is $10,001.
- You can borrow up to a total loan-to-value ratio (LTV) of 80 percent.
- The lender has a minimum credit score of 700. There’s also a maximum debt-to-income ratio (DTI) of 45 percent.
- There are no application costs and no annual fee. Also, there are no closing costs if you borrow $500,000 or less.
Pros and cons
Before you apply for any financial product, it’s important to know both the benefits and drawbacks. Here’s what to know about each with an HSBC HELOC:
- Competitive interest rates: The lender offers an introductory variable APR as low as 3.74 percent for the first 12 months, then rates as low as 4.55 percent based on your creditworthiness, existing relationship with HSBC, state of residence and other factors. According to Bankrate, the average HELOC rate is 7.21 percent, as of mid-August 2019.
- Low costs: The lender doesn’t charge an application or annual fee. Also, if you borrow $500,000 or less, you won’t have to pay any closing costs at all. Even if you borrow more than that, the bank carries most of the load. You may, however, be on the hook for some fees if you cancel your account early.
- Fixed-rate option: The HELOC has a variable interest rate. But if you want, you can convert some or all of your HELOC balance to a fixed-rate loan. Doing this can lock in your interest rate and protect it from increasing in the future.
- Average LTV limit: HSBC allows you to borrow up to an LTV of 80 percent, which is average for home equity lenders. Some will allow you to go higher, which can be helpful if you need to borrow a lot or don’t have a lot of equity in your house.
- High credit score requirement: You’ll need a credit score of 700 or higher to qualify for a HELOC with HSBC. Many other home equity lenders will lend to you if you have a 620 credit score, and sometimes even lower.
- No online application: You can share your information online to get a call from a mortgage consultant, but there’s no option to apply on your own through the bank’s website.
- No home equity loan option:While you can convert some or all of your HELOC balance to a fixed-rate loan, the bank doesn’t offer a separate home equity loan product, which can be better if you want an installment loan instead of a revolving line of credit.
HSBC offers several options for buying and refinancing a home, and also allows you to tap your home equity with a HELOC.
In most states, there’s no minimum for how much you can borrow, and you can get up to $350,000 or $1 million, based on your relationship with the bank. However, you’ll also be limited by the bank’s 80 percent LTV limit.
The HELOC has a 10-year draw period and a 10-year repayment period, and you can choose from two payment options: principal and interest, or interest-only. With the former, you’ll pay principal and interest during both the draw and repayment periods. With the latter, you’ll make interest-only payments during the draw period then pay principal and interest during the repayment period.
You’ll also have the option to convert some or all of your HELOC balance to a fixed-rate loan. You can do this up to three times, and repayment terms range from five to 20 years.
There are no application costs and no annual fee for an HSBC HELOC. Also, there are no closing costs if you borrow $500,000 or less. If you’re borrowing more than that, you’ll be on the hook for 50 percent of title insurance costs and any mortgage tax-like fees; HSBC will cover the rest.
There’s no prepayment penalty. But if you close your account within three years, you’ll be assessed a termination fee of $500 or $750, depending on where you live, plus any mortgage tax-like fees HSBC paid on your behalf at closing.
As for interest rates, you’ll start with an introductory variable APR as low as 3.74 percent for the first 12 months. After that, rates start as low as 4.55 percent APR based on your creditworthiness, existing relationship with HSBC, state of residence and other factors.
HSBC offers two opportunities to get a discount on your interest rate. When you close, you’ll get a 0.25 percent discount if you make a draw of $25,000 or more. You’ll also qualify for a 0.50 percent discount if you set up automatic payments as a Premier checking customer, or 0.25 percent if you have an Advance or Personal checking account.
To qualify for a HELOC with HSBC, you’ll need a credit score of 700 or higher, plus a DTI of 45 percent or lower. The lender will also consider other factors, including your employment and income, and property-related information.
You also need to be an existing banking customer with HSBC. And while you don’t need to have a certain type of checking account to qualify, different levels come with different benefits.
To qualify for a larger autopay discount and higher loan amounts, you’ll need to be a Premier checking customer. To qualify for Premier status, you’ll need to meet one of the following requirements with the bank:
- Have at least $75,000 between your deposits and investments
- Have at least $5,000 in total direct deposits per month
- Have a mortgage loan with an original loan amount of $500,000 or higher
How to apply
You can’t apply for an HSBC HELOC online. But you can start the process through the bank’s website by providing some information about yourself. More specifically, you’ll share your name, contact information, desired loan amount and purpose, zip code, when you’re planning to apply and other information.
Once you submit all this, HSBC will have a mortgage consultant reach out to you to continue the process.
To apply, you’ll need the following information on hand to share with the mortgage consultant:
- Social Security number or tax identification number
- Date of birth
- Email address
- Monthly mortgage/rent payment amount
- Annual income, employment information and other income sources
- Property information, including address, purchase date and price, estimated value, mortgage holder, outstanding balance, monthly payment, taxes, insurance and all names on the deed.
Before you apply for a HELOC with HSBC, take some time to shop around for home equity options from other lenders as well. While this process can take time, it can help you compare features and terms and ensure you get the best deal that you qualify for.
If you’re ready to apply with HSBC, you can start the process online through its website. If you have questions about the bank’s HELOC, you can call and speak with a representative at 800-622-7759. You can also utilize the bank’s live chat feature.
How Bankrate Rates HSBC
Editorial disclosure: All reviews are prepared by Bankrate.com staff. Opinions expressed therein are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in the review is accurate as of the date of the review. Check the data at the top of this page and the lender’s website for the most current information.