Borrowers can save thousands of pounds in interest and trim years off the life of their mortgages by making regular overpayments. Even a lump sum overpayment can make a difference. Banks are currently pushing for overpayment as it helps to build their capital bases.
HSBC and Lloyds TSB are writing to all their customers informing them how to make overpayments after thousands have asked how to do this. But make sure the lender reduces the term of your mortgage, not your monthly repayments.
The major banks have made nearly £500m more from UK customers in six months despite the credit crunch through account holders by charging more for mortgages, loans and credit cards. Figures show five of the country’s biggest banks - Lloyds TSB, Royal Bank of Scotland Barclays, HSBC and HBOS - made combined half-year profits of £4.294bn, nearly £500m more than the £3.808bn raised during the same period last year.
The figures reveal the Royal Bank of Scotland increased its profits from its UK businesses by 9.2%. This is despite the global company announcing losses of £691m last week - one of the biggest in UK banking history.
Homeowners are facing fees of up to £5,000 to take out a mortgage. A devastating report released yesterday shows that the average cost has almost doubled in a year. Interest rates charged by banks have also gone up. Separate Government figures out yesterday brought further bad news in that house prices are falling at their fastest rate since records began. After all the panic in the mortgage market, people may be tempted to grab the best headline rate deal but the fees must also be taken into consideration. HSBC charges up to £5,000 for its recently introduced ‘Rate Matcher’ deal, which lets homeowners whose current fixed-rate deal is about to expire get the same rate with HSBC for another two years. The mortgage meltdown continued yesterday with the number of deals available falling to just over 4,000 from 15,599 last summer.
HSBC has offered to match the interest rate of any borrower coming off their fixed rate deals. This will apply to both HSBC customers and those remortgaging. It effectively shields borrowers from the recent increases in the cost of home loans. The Rate Matcher will mean their existing fixed mortgage rates - down to a cut-off point of 4.54% - will continue for another two years. But the deal will only last for five weeks so mortgage borrowers need to act quickly to take advantage. It is only available direct to consumers as the bank does not offer its mortgage products through mortgage advisers. Borrowers can borrow up to a maximum of 80% of their property’s value (20% deposit required) and a fee will be payable depending on the rate fixed. A maximum of £250,000 can be borrowed via the Rate Matcher service, although customers with larger mortgages can take the remainder on a standard HSBC deal. The offer is only available for borrowers whose current mortgage deal runs out before the end of June. The offer is available from 14th April until 18th May. This is a pleasant change from the do-nothing attitude most big lenders appear to be adopting at the moment!
