yogita_dabasia

Help needed please! As newbies to the home buying process, we have had a Home loan approval from HSBC at fixed rate of 7.99% (was on a special rate 3 wks ago and opted to lock it in). What with the rate changes, HSBC have not actually passed on these on their fixed products. We are yet to settle on the purchase, and our question is, can we change providers and forfeit any fees that HSBC will charge for their work so far? We have not signed anything as yet, just the application, and have nothing in writing to us re the loan approval, just some communication from them to RE to confirm the loan details/amount (as purchase was subject to finance approval). We have noticed that NAB have dropped their 3 yr fix to 7.19% so quite a saving over 3 yrs, but what can we do, if anything? What a nightmare, its one thing after another for us, and we have 3 weeks to settlement. Can anything be done with the short time? Any advice from mortgage brokers or anyone with more experience than us would be much appreciated, thanks

E3only

From what I understand you are saying :
1. You just had applied for loan and may have got approval ? In that case no legal obligation to continue. I am sorry but you would be st*pid to lock it in at 7.99% when the markets are falling interest rates in the short term. BankWest today is giving 7.55% interest for 2 years reverting back to stad variable. So don't sign 7.99 coz the interest rates according to experts are going to fall further !!!!

2. The problem is having the loan ready for disbursment on time. Gnerally they need to do v aluation and get ready. How many days before you settle ? I suggest if there is sufficient time just see a broker of call a few banks to see what are the best raates. If I were you - I wont be locking any interest rates as they are on the way down ......per many analysts.

So over all - no obligation but make sure you are ready to settle on the day coz if now there are penalties....dont sight lock in fixed rates...7.99 is outrageous to say the lest......WestPac is offering heaps lower than that....

hoofie2002

If you haven't signed the contract documents for the mortgage [which will then release the money] then you can walk away at any time. I presume your sale contract for the house with the agent etc. says 'subject to finance'.

You could go back to HSBC and say 'Stop, I want to transfer to a different product' if they have one that is acceptable - that is very easy and quick to do as the application just needs reworked.

However, the way rates are going, I'm sure you could do better somewhere else if you are a good risk. The BankWest tracker is a good deal - I remortgaged from a standard BankWest Variable to it and saved some dollars.

yogita_dabasia

Hi there, and thank you sooooo much for your replies, I've not even slept well last night worrying about all of this. So the situation is that we have an approval from HSBC, and the lady dealing with us did call last week to ask us to go in and sign the loan approval form(?, excuse the terminology as I am not familiar with this), but I think this is the bit where we are happy for the bank to release the funds to us. We have not been into the branch to do this yet. So can we walk away? I have left a msg for her to call me to seek out other options with HSBC. Else, we have 20 days left before settlement. It seems possible to go elsewhere, but what about things like the FHOG (the form to State Rev was handed in to HSBC) and the dealings between the bank and the Sett Agent? BankWest seems an excellent recommendation, and are you suggesting we go for a tracker type product rather than fixed? Or would a fix be ok, at a low rate say 7.29% for 1 year? Not sure how the early repayment charges work here, are you tied in after the fixed period? Even with BankWest are you tied into the tracker after the 2 yrs, or can you move to another provider if there is a better deal? Sorry for the many questions, also am getting on to some banks for help now.

I cannot see the Bankwest Tracker deal (7.55%) online on their website? Can anyone tell me where to look for this? Can only see one for 8.35%???

E3only

Hi,

I assume you have a lawyer who is taking care of all the dealings with the bank and overseeing things.

First - you need to ustand that 7.29% is a cr Ap rate.They are already talking about another 50 bps point reduction in interest next month and another 25 early next year. Which means my bankwest could be around 6.8-6.9 if they pass it.

Now I say again - fixing mortgage is falling interest rates is stupidity. Why are you so worried about FHOG and signing papers etc. Don;t you have a lawyer who is taking care of all these things.

You should not be signing any docs until you have a lawyer. Everyone has one and you should be asking specific questios to them. This forum is helpful but sometimes words gets misunderstood.

Please do not sign anything with HSBC before you ustand what is happening. I am sorry - from your posts I think you have little to no idea.

So, falling interest rates and fixing mortgages dont work!!! 20 days to settlement and you are asking of FHOG, who to bank with....!!! I did that research 4-6 months in advance.

Go have a word with the lawyer plese....who is doing your settlement ?? I am amazed....

MartinH

You can do a lot better than 7.99 fixed. Best rates on offer on 2&3 year fixed rates are around 1% lower than that, see:

www.ratecity.com.au

There is a lot of expert discussion at the moment about rates coming down - but then "experts" were responsible for the current financial crisis so I am not sure I would be trusting them.

What you do depends on your attitude to risk i.e. rates may come down in the short term but would you be comfortable if they rocketed back up again?

In those circumstances you might be better mixing your mortgage between a fixed and variable element. That way you will have the security of knowing what your payments will be but will also be able to take some advantage of falling rates when and if they fall. Your split would depend on your attitude to risk.

briwi

You can swap - I signed up for the HSBC deal as I like to know how much I'm paying (this was before this round of interest rates cuts when it was actually the lowest rate out there), however HSBC used incorrect figures to calculate my loan (don't even get me started on that one) and so offered me $100,000 less than we had discussed - so I dropped them like a hot potato. However, HSBC did charge me the fixing fee plus some other charges - most unfair as it was their error that caused me to walk away - so be aware that that will happen.

E3only

To be honest for my home loan I would go with a bank that can provide me with
Customer service – prefer recommendations here
Has branches – where I can walk into to discuss and sort out stuff if I need to
May be local &
Competitive

I repeat again – and I concur that the so called experts get it wrong many times – fixing the mortgage right now is suicide to be honest. I would definitely get some professional advice than relying on forum (no offence but everyone’s situation is diffirent)

There have been bunch of studies done that financial over a span of time, variable rates are always better but I like the idea of partially fixing the interest rates.

If one asked me today – I would suggest NO fixing rates for atleast next 6-12 months simply because it’s top uncertain.

Market is pointing to a 2% drop in rates over the next 6 months. Now even if we say it will drop by 1% fixing rates today would be massive debt tomorrow. Remember it’s not only the variable rates but fixed rates that change from time to time. What I mean is banks at the moment have their fixed rates below variable rates for a reason. They want to suck people into signing lower rate but they know that variable rates are going to fall so in effect they are protecting profits!!

I think personally – next 6-12 months not to worry go variable and cheapest (BankWest) is a good one as I personally hold my mortgage with them. They offer 1% off major four banks interest rate and you can always jump ship.

My friend recently refinanced with NAB from Virgin and NO COST. So that was awesome. What I am saying is – banks are hungry for business as the housing market is too competitive and it won’t change for a while. The government grant will only push the property prices up.

Supply is still tight. Anyway getting back to the question :
1. Seek advice
2. Definitely research more which is lacking sorry
3. DO NOT sign anything until you know what it is
4. Surely your lawyer should be able to assist

Thanks