Yahoo Finance 
HSBC launches 0.99% mortgage
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.
For more information or to take out the HSBC mortgage, call 0808 256 1384.
[Househunters spend longer watching Corrie than viewing homes]
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.
[Beware mortgages bearing free gifts]
How it compares
As exciting as that 0.99% interest rate is, don't forget to take the massive ÂŁ1,999 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 | |
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 | |
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’s SVR) | 80% | £999 | £150 fixed sealing fee |
And here are rates for 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 256 1384 |
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 |
