HSBC launches 0.99% discounted variable mortgage


Updated on 20 October 2014 | 4 Comments

HSBC launches its lowest mortgage rate ever.

HSBC has launched its lowest ever mortgage rate of just 0.99% for an initial two year period.

Borrowers who have a 40% deposit or equity will be able to take advantage of the market-leading rate, which offers a 2.95% discount from HSBC’s Standard Variable Rate (SVR). Just beware of the hefty £1,999 booking fee.

To take out the HSBC mortgage, call 0808 115 8734.

What is a discount mortgage?

A discount mortgage is a type of variable mortgage that isn’t directly linked to the Bank of England Base Rate, unlike tracker mortgages.

The rate you’re offered is a discount on your lender’s Standard Variable Rate, which the lender sets themselves. Just bear in mind that it can be changed at any time, regardless of any changes to the Bank Base Rate. Once the initial discounted period ends, you’ll be moved back onto the actual SVR.

The upshot of this type of mortgage is that you can be sure that your rate remains below your lender’s SVR for the length of the introductory deal. At the moment, with SVRs generally fairly low, that means the mortgage will have a tiny interest rate.

They’re not the most stable mortgages, but can offer quite appealing rates if you fancy the gamble. However, if you had a large discount from the SVR you’ll get a mighty shock when the deal comes to an end.

Compare mortgages with lovemoney.com

How it compares

As exciting as that 0.99% interest rate is, don't forget to take the massive £1,999 fee into account. For some borrowers, that fee means it will not actually work out as the cheapest deal.

Let's take a look at some of the other best two-year discounted mortgages for borrowers, starting with a 40% deposit.

Lender

Interest rate

Maximum loan-to-value

Product fee

Exit fees

More information

Skipton Building Society

1.59% (3.4% discount from Skipton Building Society’s SVR)

60%

£995

1% during discounted period

Apply in branch

Principality Building Society

1.6% (3.39% discount from Principality Building Society’s SVR)

65%

£994

3% during discounted period

Head to our mortgage centre

Cumberland Building Society

1.64%  (2.85% discount from Cumberland Building Society’s SVR)

60%

£699

2% for discounted period

Apply in branch

 Now what about if you have a 25% deposit:

Lender

Interest rate

Maximum loan-to-value

Product fee

Exit fees

More information

Principality Building Society

1.70% (3.29% discount from Principality Building Society’s SVR)

75%

£994

3% of mortgage advance

Head to our mortgage centre

Leek United Building Society

1.74% (3.45% discount from Leek United Building Society’s SVR)

75%

£199

£125 Mortgage Exit Administration Fee

Apply in branch

Hinckley and Rugby Building Society

1.85% (3.79% discount from HRBS’ SVR)

80%

£999

£150 fixed sealing fee

Call 0800 434 6343 or apply online

And a 10% deposit:

Lender

Interest rate

Maximum loan-to-value

Product fee

Exit fees

More information

Leek United Building Society

2.49% (2.7% discount from Leek United Building Society’s SVR)

90%

£199

Fixed £125 sealing fee

Apply in branch

HSBC

2.89% (1.05% discount from HSBC’s SVR)

90%

£999

2% sum repaid first year,

1% second year

Call 0808 115 8734

Furness Building Society

2.90% (2.64% discount from Furness Building Society’s SVR)

90%

£599

3% Mortgage Advance; £40 fixed Deeds Fee; £50 fixed Sealing fee for discounted period

Apply in branch

Would you go for this offer? Let us know in the comments below.

Compare mortgages with lovemoney.com

More on mortgages:

Fixed mortgage rates drop ahead of base rate change

How to cope with interest rate rises on your mortgage

Bank of England requests more powers to curb mortgage lending

Lloyds offers free iPad with mortgages

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