HSBC has announced a policy change, increasing its maximum mortgage term to 40 years.
The lender said the change will cover all lending types including purchase, remo and additional borrowing and will go live tomorrow (August 30).
Nicholas Mendes, mortgage technical manager at John Charcol, suggested that HSBC’s policy change is “reflective of the current market conditions”.
He explained that: “Lenders typically have two options to secure business either through rate reductions or relax their criteria to take on extra business.”
HSBC detailed that residential applications on capital repayment will be able to apply for a maximum term of up to 40 years.
Buy-to-let applications, for all repayment types (interest only and cap rep), will also be able to apply for a maximum term of up to 40 years.
Second homes will no longer be limited to 30 years and can now be considered up to 40 years.
However, residential applications on interest only products will remain capped at a 25-year maximum term.
This will include part and part interest-only mortgages as well.
Mendes stated that, by extending the maximum term, this will allow more mortgage holders to reduce the impact of higher rates on their mortgage payments.
Something which Mendes identified as having extended to “purchase, remortgages and those looking at additional borrowing”.
He added that HSBC’s previous maximum term was 35 years and that this move brings it in line with the majority of the market and high street competitors.
A formal communication is expected to be issued to all registered brokers tomorrow.
tom.dunstan@ft.com
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