VANCOUVER, April 28 /CNW/ - HSBC Bank Canada has launched a unique
mortgage option for home owners looking to pay down their mortgage faster
without having to forego the security and liquidity of maintaining a cash
reserve in their savings account.
The new HSBC Smart Savers Mortgage enables homeowners to link their
savings accounts to their mortgage and use the balances in these accounts to
'offset' or lower the interest rate on the mortgage. As the actual monthly
payment remains the same, this feature will allow more of each monthly
mortgage payment to be applied directly to paying down the mortgage principal
and help the homeowner become mortgage-free faster. This type of mortgage has
already been pioneered by HSBC in several other international markets such as
the UK and Hong Kong with great success.
Linda Seymour, Senior Vice President, Personal Financial Services, HSBC
Bank Canada said: "In times of economic uncertainty many homeowners have
traditionally looked for ways to pay down their mortgage more quickly, but
have held off because of the competing instinct to hold on to strong cash
reserves as a fund for emergencies or other future uses. This new deposit
linked HSBC Smart Savers Mortgage will allow them to do both."
As interest rates charged on mortgages have traditionally been higher
than interest rates offered in savings accounts, an additional benefit to
users of the HSBC Smart Savers Mortgage program would be that they would in
effect be generating an interest "premium" over what they would receive on
their regular savings.
For example, a home owner with a HSBC Smart Savers Mortgage with a
balance of $300,000 at 4.59 per cent APR (for a 5-year fixed term, renewed at
the same rate, amortized over 25 years) who links $45,000 in deposits
throughout the life of the mortgage, effectively reduces their interest rate
to 3.90 per cent APR. While the monthly payments stay the same throughout the
term of the mortgage, more money goes towards the principal. In this example,
the amount of deposits equals 15 per cent of the mortgage balance, so the
interest rate is reduced by the same 15 per cent. This allows the home to be
paid off more than three years faster than with a traditional mortgage and
will save nearly $50,000 in interest over the life of the loan.
HSBC Bank Canada, a subsidiary of HSBC Holdings plc, has more than 290
offices, including over 140 bank branches, and is the leading international
bank in Canada. With around 9,500 offices in 86 countries and territories and
assets of US$2,527 billion at 31 December 2008, the HSBC Group is one of the
world's largest banking and financial services organizations.
For further information:
For further information: Media enquiries: Ernest Yee, Vice President,
Corporate Affairs, HSBC Bank Canada, (604) 641-2973; Michael Edmonds, Senior
Manager, Public Affairs, HSBC Bank Canada, (416) 868-8282