Applying for a mortgage is, for most people, a necessary part of the whole house buying process. There’s a vast number of lenders to choose between, too. This includes HSBC, a popular provider with a good range of options for veteran home movers and those looking to buy their first property.
HSBC is one of the UK’s oldest banks, plus a leading mortgage provider. In fact, in 2019, HSBC accounted for around 7.5% of the total mortgage market.
HSBC is highly commended by the What Mortgage Awards for Best Large Loan Mortgage Provider. They’re currently shortlisted for numerous categories in the 2021 awards.
Whether you’re looking to buy your first home, move home or remortgage your house, HSBC has several different mortgages to pick from. As well as standard mortgage products, you can also apply for:
Suppose you’re buying an additional property to rent it out for extra income. In that case, you might suit an HSBC buy-to-let mortgage. These are specifically for buy-to-let properties. HSBC’s requirements include:
A minimum of 25% for your deposit – meaning you’ll only be able to borrow up to 75% of the property’s worth
You must earn over £25,000 a year
You’ve owned your current home for at least 6 months
You’re not already a professional landlord
The rental income of the property is at least 145% of your mortgage repayments
You’ll benefit from a free standard home valuation, too. You can apply for an HSBC buy to let mortgage over the phone, online, or in-person in your nearest branch.
While not always available, HSBC is one of the few providers who offer 95% mortgages. These are targeted at first-time buyers and allow them to borrow up to 95% of their home value.
These mortgages are designed to get first-time buyers on the property ladder sooner. With HSBC, you’ll need to make sure you’re buying a property worth less than £400,000 to qualify for one. Remember that your monthly repayments will be higher on a 95% mortgage than they would be if you decided to save for a larger deposit.
HSBC paused their 95% mortgages due to COVID-19 but plan to reintroduce them from April 2021.
This kind of mortgage does what it says on the tin. You’ll pay monthly interest payments and then pay your actual mortgage amount in a lump sum at the end of your term.
They’re another good option for buying a property to rent out, as your monthly mortgage payments will be smaller. To qualify for an interest-only mortgage with HSBC, you’ll have to set out exactly how you intend to pay off the lump sum once your mortgage term is up.
The amount you’ll be able to borrow from HSBC will depend on a few things. Namely, your annual income, the value of the home you’re looking to buy, and the amount you have saved for a deposit.
In general, you should be able to borrow up to 4.75 times your annual income. Nevertheless, this amount can be affected by:
Your credit history
Any debts you might have
Your average expenses and outgoings
As well as considering the total amount you’ll be able to borrow, you’ll also need to consider your loan-to-value (LTV). This is the percentage of the property value which you want to borrow. For example, if your LTV on a £200,000 property is 70%, you’ll borrow £140,000.
HSBC offers 60%, 65%, 70%, 75%, 80%, 85% and 90% mortgages. They also sometimes offer 95% mortgages to first-time buyers. This means that if you want to buy a property worth £100,000, you’ll only need to save £5,000 for a deposit.
To get a better idea of what you could qualify for with HSBC, you can use our handy mortgage calculator.
When you apply for a mortgage, it’s not just your LTV and deposit which you’ll need to think about. There’s also your mortgage rate to consider. This is the amount of interest you’ll pay each month on top of the repayments for the loan itself.
HSBC offers various mortgage rate options, including fixed-rate mortgages. Fixed-rate mortgages are when your monthly interest rate remains the same for the duration of your mortgage term.
Many HSBC mortgages are fixed-rate. They’re a good match if you want to be able to predict and plan out your finances. Your monthly mortgage repayments will stay the same throughout your mortgage period and will not be subject to interest rate changes.
Once your fixed-rate mortgage comes to an end, you’ll automatically switch to the HSBC standard variable rate until you apply for another fixed rate product.
A standard variable rate (SVR) mortgage with HSBC is something you’ll be switched onto once your fixed-rate mortgage has ended. While some mortgage lenders allow you to apply for a variable-rate mortgage from the get-go, HSBC only offers them after you’ve had a fixed-rate mortgage.
The standard variable rate is chosen by HSBC and can go up or down whenever they see fit to change it. This means your interest payments could end up being less than a fixed-rate mortgage (although they could also be higher). Another benefit of a variable rate mortgage is that there’s no limit to what you can overpay on your mortgage every year.
A tracker-rate mortgage is when your interest rate is fixed against the Bank of England Base Rate. This is set by the Bank of England and is what they offer to all banks and lenders. It can go up and down for numerous reasons but is currently (as of March 2021) set at 0.10%.
Most lenders will also add a small margin to the rate. It’s possible to apply for an HSBC term tracker-rate mortgage, which lasts for 2 or 3 years. Again, these mortgages can have low monthly interest payments and usually allow you to overpay as much as you like.
If you’ve decided to sell up and move, it might be possible to ‘port’ your mortgage. This is the technical term for keeping the same mortgage terms you had on your previous home and transferring them to your new one.
Porting your mortgage is a good option if you’re happy with your current rate and repayment terms. Knowing that your payments will stay the same can help budget your finances. Depending on your mortgage, you might be able to port an existing HSBC mortgage.
Sometimes, it might be necessary to pause your mortgage payments if you’re experiencing a life change or period of financial difficulty. This is called a mortgage holiday and is something HSBC offers to its mortgage clients.
With HSBC, you can apply for a 3 month mortgage holiday twice (so for a total of 6 months) during your mortgage period. During this time, your monthly repayments will be paused. The interest will continue to add up, though, meaning you’ll have more to pay back in the long run.
As well as HSBC mortgage holidays, it’s also possible to overpay on your mortgage if you’ve got money to spare. It’s a good option if you’re keen to pay it off early or reduce your interest amounts.
Overpayments aren’t possible with all HSBC mortgages; you’ll be able to find out if you can overpay on yours by looking at your mortgage paperwork. In general, fixed-rate mortgages have an annual overpay allowance of 10% of your total mortgage amount. Once this is exceeded, you’ll likely have to pay an Early Repayment Charge.
Variable-rate and tracker-rate mortgages with HSBC don’t have overpayment limits or charges, so you can overpay as much as you like.
If you think HSBC could be a good fit for your mortgage needs, you’ll be able to start your application process online, over the phone, or with an advisor in a branch.
The process involves several steps, and you’ll be able to track your progress online.
To get started with your HSBC mortgage application, you’ll need to make sure that either you or your solicitor have assembled all the necessary documents. These include:
Your agreement in principle (see below)
Proof of address and identity
Proof of income – either payslips or tax returns if you’re self-employed
A repayment strategy if you’re applying for an interest-only mortgage
Sometimes, you may also need to provide bank statements or proof that you have the deposit for your home. Note that part of the application process for HSBC mortgages will include a full credit history check which will then be on your credit file.
An agreement in principle (AIP) is a requirement of all mortgage lenders. Sometimes referred to as a mortgage in principle or decision in principle, it’s basically a document that acts as proof to a bank or lender that you can afford the mortgage you’re applying for.
A mortgage in principle will assess how much you can afford to borrow and is a must-have before you start your application. It’s also a good thing to have when you’re viewing properties to buy, as you’re more likely to be taken seriously by an estate agent.
Applying for an AIP is easy and can be done online through HSBC or another lender. You’ll need to have certain information to hand about your income and average spending habits.
It’s worth noting that applying for an agreement in principle will not affect your credit score. What’s more, if you apply for one through HSBC, this doesn’t mean you have to then commit to using them for your mortgage.
From the date you submit your mortgage application, most mortgage providers will come back with an offer within two weeks. This could be more or less, depending on your individual application or even how busy the market is at the time you’re looking to buy.
To make sure there are no delays to your application, submit all necessary paperwork at the start. Once you receive a mortgage offer from HSBC, it will be valid for 6 months. Within this time, you should:
Have an offer accepted on a property
Have HSBC conduct a standard valuation of the property – to check its worth matches up with what you’re asking for as a loan
Complete any legal aspects of your property purchase – this typically takes between 6 to 12 weeks
Conduct any surveys if needed – like home buyer’s report and building survey
Exchange contracts and complete on your property
HSBC is a popular option when it comes to mortgages. In the Which? Guide 2020 survey, HSBC rated 12th out of 23 major UK mortgage providers. They scored well for their transparency, overpayment options, and their range of rates.
Not sure which mortgage is right for your needs? Compare mortgages from all the UK’s top lenders, including HSBC, and check out our mortgage guides for even more details on the mortgage application process.