HSBC unveils cheapest Help to Buy mortgages yet

The bank is launching its Government-backed mortgages, but are there better 95% deals out there?

HSBC has announced details of new Help to Buy mortgages for people who have at least a 5% deposit to put down.

And they look pretty good – particularly compared to the other mortgages on offer in the second part of the scheme from Halifax/Bank of Scotland and NatWest/Royal Bank of Scotland.

From Monday (25th November), HSBC will be offering a two-year fixed rate with an initial interest rate of 4.79% and a five-year fixed rate with an initial rate of 4.99%. Both come with a £99 booking fee.

Here's a quick reminder of how the Help to Buy scheme works.

How Help to Buy works

There are two parts to Help to Buy. The first, which was launched in England in April and in Scotland in August, offers a mortgage of up to 75% of the value of the home, plus a loan of up to 20%. This can be used to buy any new-build property up to a value of £600,000 (£400,000 in Scotland).

In England, you’ll pay interest on the equity loan after five years, but in Scotland you won’t have to at any time. You need to go through a mortgage adviser to get hold of one of these mortgages.

The second part, known as the mortgage guarantee scheme, launched in October and is available across the UK on any property, not just a new-build, up to a value of £600,000. It offers 95% mortgages, which are guaranteed by the Government.

HSBC has now joined Halifax/Bank of Scotland and NatWest/Royal Bank of Scotland in launching its mortgage guarantee offerings. Aldermore has said it will launch its mortgages before the end of the year, with Santander and Virgin Money to follow in the new year.

See the latest mortgage rates

Who's eligible for HSBC mortgages?

In order to be eligible for HSBC's mortgages, you will need a deposit of at least £10,000. You'll be shown how future interest rate rises will impact your monthly repayments.

The mortgages are only available for homebuyers, not people looking to remortgage, and will only be available in the bank's branches.

A competitive market

HSBC is entering a competitive market, with many building societies not participating in the second phase of Help to Buy having already undercut the Government-backed offerings.

The latest challenge came from the Yorkshire Building Society group, which comprises Yorkshire, Barnsley, Chelsea and Norwich & Peterborough Building Societies and the mortgage broker-only Accord Mortgages.

Their two-year and five-year fixed rate and offset mortgages beat Halifax/Bank of Scotland and NatWest/Royal Bank of Scotland, although they're not cheapest overall.

So how do HSBC's new mortgages compete with the other Help to Buy mortgages and the top general 95% mortgages?

HSBC now offers the top two-year fix, though if you want to fix for longer it can definitely be beaten. However, this table does show how much of an improvement its mortgages are on the previous Help to Buy offerings.

So make sure you shop around. You may even want to wait until the new year now, as the launch of the remaining Help to Buy mortgages is likely to trigger more competitive 95% mortgages from other lenders as well.

See how much a mortgage could cost you and get help from an expert mortgage adviser

This article aims to give information, not advice. Always do your own research and/or seek out advice from a regulated broker, before acting on anything contained in this article.

Your home or property may be repossessed if you do not keep up repayments on your mortgage.

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