Introduction
Home improvements can enhance both comfort and property value, but funding them often requires strategic financial planning. This case highlights how we assisted homeowners in Ascot to secure a further advance with their current lender, HSBC, to finance their renovation plans while ensuring affordability and stability.
The Scenario
The homeowners already held a mortgage with HSBC for £320,887, with 33 years and 8 months remaining on the term. They wanted to borrow an additional £30,000 to complete home improvements while maintaining their existing mortgage setup.
Their key preferences included:
- Fee-Free Further Advance: To avoid early repayment charges (ERC) and additional fees, they preferred to secure the additional funds from HSBC.
- 5-Year Fixed Rate: The homeowners valued the stability of predictable payments over five years, helping them manage their budget.
- Capital Repayment Basis: They chose a repayment mortgage to ensure the loan would be fully paid off by the end of the term.
- Maximum Term: They preferred to keep the term consistent with their existing mortgage to ensure affordability.
Protection needs were discussed but deferred for review closer to the completion of the further advance.
The Challenge
Key challenges included:
- Avoiding ERC: Securing additional funds without incurring penalties for early repayment.
- Consistency with Existing Mortgage: Aligning the new loan with the existing mortgage terms for ease of management.
- Affordability: Structuring payments to fit comfortably within their budget.
Find out Your Options
The Process
Step 1: Understanding the Customers’ Needs
We conducted an in-depth consultation to confirm their priorities, including their preference to remain with HSBC and avoid any additional fees or penalties.
Step 2: Reviewing HSBC’s Options
After assessing HSBC’s product offerings, we identified a fee-free further advance option that aligned with the customers’ financial goals and renovation plans.
Step 3: Structuring the Further Advance
The further advance was structured as a 5-year fixed-rate loan on a capital repayment basis, with the same 33-year term as their existing mortgage. This ensured predictable payments and consistency in loan management.
Step 4: Liaising with HSBC
We facilitated the application process with HSBC, ensuring a smooth transition and timely approval for the additional funds.
The Solution
HSBC provided a tailored further advance solution that met the customers’ needs:
- Loan Amount: £30,000
- Product Type: Capital Repayment Mortgage
- Rate: Fixed for 5 years
- Term: 33 years (matching the existing mortgage)
- Fees: No product or valuation fees
This solution allowed the homeowners to fund their home improvements without incurring penalties or exceeding their budget.
Why This Solution Worked
- Avoided Additional Costs: By staying with HSBC, the homeowners avoided ERCs and benefited from a fee-free product.
- Stability: The 5-year fixed rate ensured consistent payments, providing financial peace of mind.
- Aligned Terms: Matching the further advance term with the existing mortgage simplified management and maintained affordability.
The Outcome
The homeowners successfully secured the additional funds, enabling them to complete their home improvement plans. Key benefits included:
- Predictable Payments: Fixed-rate stability over five years supported their financial planning.
- Affordable Solution: The term extension ensured manageable monthly payments.
- Hassle-Free Process: Remaining with HSBC streamlined the application and approval process.
Closing Thoughts
Securing a further advance can be an effective way to finance home improvements without disrupting your existing mortgage. This case highlights the importance of aligning additional borrowing with your long-term financial goals.
If you’re considering a further advance or exploring ways to fund your renovation plans, contact us today.
Our tailored advice ensures you find the best solution to meet your needs while maintaining financial stability.
