If you take out the HSBC Home Value Loan, you’ll enjoy a competitive variable rate and your own personal banker who can guide you through the home loan process, from application through to settlement.
The loan offers flexible features such as the ability to make unlimited extra repayments and unlimited redraws, however it does not include an offset account which could be a drawback for some.
The relatively high upfront fees may put some buyers off, especially those on a tight budget who aren’t likely to take advantage of the features the loan offers, but remember, it’s a one-off fee and it’s by no means the highest on the market.
Once up and running, there are no ongoing monthly fees – but other fees may apply so you’ll need to do a full review of the pros and cons.
More specific product information is available here.
Review of the highlights
Owner occupiers and investors can borrow up to a generous $7.5 million and up to a maximum 90 per cent of a property’s value, though you’ll need lenders mortgage insurance if your deposit is less than 20 per cent.
Borrowers can choose their repayment frequency whether weekly, fortnightly or monthly. You also have the option of repaying principal and interest or interest-only instalments for a maximum of five years. However, if you repay interest only, monthly repayments are required, which is fairly normal.
Borrowers have the flexibility to make additional repayments at any time, without an early repayment fee, which will help you save on interest costs over the life of the loan.
You can split your loan with one other loan for free; however, each subsequent split will cost you a fee of $100, so watch out for this. If you split your loan with a HSBC Fixed Home Loan be aware that you can only make limited additional repayments and you can’t redraw on this section of the loan
Another option for borrowers is to combine your home loan with a HSBC Home Equity loan, which operates like a line of credit. There is no set loan term and borrowers can draw down on their loan up to a pre-agreed borrowing limit, much like a credit card. Minimum repayments are interest only, but you can make additional repayments to pay off your loan faster at any time and save on interest.
The redraw unlimited option allows you to take out funds when you need them, whether you want to renovate, buy a new home or even go on a holiday however be aware that under HSBC’s Home Value Loan, you are only get one free redraw a month – any others will attract a redraw fee..
Another plus is that the HSBC loans are portable, so you can transfer your home loan to a new property if you decide to move.
Review of the lowlights
The main downside on the HSBC Home Value Loan is the relatively high upfront fee. This fee is sometimes waived for new customers if they meet certain criteria, so it’s worth checking with HSBC whether they have any deals going when it’s time to apply. Other fees may apply, depending on how you repay and structure your home loan, such as a settlement fee.
The other thing to watch out for on this loan is the interest rate. While HSBC often have competitive specials to attract new customers, on occasions when a special is not running you might find you can get a cheaper rate elsewhere with the same features.
The other noticeable lowlight is the fact there is no 100 per cent offset account. Savvy mortgage holders may find this too much to bear if they are reliant on being able to keep cash on the side to reduce their interest repayments without having any trouble accessing it. This loan has a redraw facility which should alleviate some people’s concerns, however probably not all.
HSBC is one of the biggest global banks, with offices around the globe, including here in Australia where it has been operating since 1965.
HSBC has a limited number of branches in Australia however there are many alternate ways to connect with the bank. If you like convenience, then HSBC offers a 24-hour banking centre, with service available in Cantonese and Mandarin. Or you can choose to do your banking online. You’ll also get the option to sit down face-to-face with a personal banker, which isn’t always possible if you go with a lower cost home lender.
HSBC also boasts customer service via Twitter, an additional channel for you to contact the bank for any general personal banking queries, Monday to Friday, excluding public holidays. Whether this adds value to your loan isn’t clear, but the bank is at least trying to communicate with its customers via channels through which some prefer. If that’s not for you, you’ll get a personal banker. The home loan approval process can be a very stressful period, especially first home buyers, so this may be an attraction.
The HSBC Home Value loan is one of HSBC’s most competitive home loans. HSBC often runs specials on this product with very competitive interest rates for new customers, usually with certain conditions such as you need to live in the property (known as being an ‘owner-occupier’). Despite the lack of an offset account on this loan, if you don’t have too much cash sitting around, then this isn’t a big drawback. There are other ways you can reduce interest on your loan such as making free extra repayments as often as you can.
It’s worth reviewing the numbers and checking out whether this loan will suit your needs or, if not, what else is on the market to find a loan that this suits your needs and circumstances. Remember though that the upfront fee isn’t an ongoing annual fee, which perhaps gives these loans some advantage over the annual home loan packages offered by the big banks, which charge an ongoing annual fee of a few hundred dollars on similar loans.
Note: This review provides general information about the above home loan. Any views expressed are the author’s own. It is not intended to be a recommendation of a particular product. To the extent that this commentary may constitute general advice, this advice is of a general nature and does not take into account your individual objectives, financial circumstances or needs. We recommend that before you make any financial decision you seek professional advice from a suitably qualified adviser and read the PDS. Read more about our important disclosures here.