Taking out a mortgage to purchase a home is an exciting milestone for many people. However, unexpected life events or financial hardships can make it difficult to keep up with mortgage payments. If you have a mortgage with HSBC and are facing challenges due to COVID-19, you may be wondering if you qualify for a mortgage payment break.
We’ll explore what mortgage forbearance is, who is eligible for it through HSBC, how to apply, the pros and cons, what happens when it ends, and alternatives you may want to consider. Read on for detailed information that can help you make the right decision for your unique situation.
Breaking Down Mortgage Forbearance
Mortgage forbearance, also referred to as a mortgage payment break or mortgage relief pause, allows eligible borrowers to temporarily suspend or reduce their monthly mortgage payment for a set period of time. Essentially, it provides a break from making the full payment while remaining in good standing on your loan.
Forbearance does not mean the payments are forgiven; you still owe the full amount. But it does offer breathing room if you are facing financial challenges. The length of time you can pause payments with HSBC is typically 3–6 months.
During the forbearance period, interest still accrues on the mortgage balance, and late fees are waived. The specific terms may vary based on your mortgage agreement. Forbearance is generally granted for homeowners facing hardship due to unforeseen circumstances.
Determining Your Eligibility
Not everyone automatically qualifies for mortgage relief through forbearance. HSBC has specific eligibility criteria that borrowers must meet, including:
- Having an active mortgage serviced by HSBC
- Having been current or less than 45 days late on payments prior to hardship
- Experiencing a demonstrable, COVID-19 related financial hardship
Valid hardships could include:
- Loss of income due to job loss, reduced hours, furlough, or inability to work
- Loss of childcare, depletion of savings, or other cash flow issues
- COVID-19-related medical expenses or healthcare costs
- Other direct impacts of COVID-19 that affect your finances
You will need to provide documentation to verify income loss, medical bills, or other evidence to qualify for payment relief based on hardship. HSBC will review your application and proof to determine if you meet the eligibility standards.
Step-by-Step Guide to the Application Process
Wondering how to go about applying for a mortgage break from HSBC? Here is a step-by-step walkthrough:
Contact your mortgage officer: Your first step is to get in touch with your HSBC mortgage officer or servicer directly. Explain your current situation and financial hardship. Request information on applying for COVID-19 mortgage forbearance.
Request an application: The mortgage officer will provide you with the necessary application to formally request forbearance based on your circumstances.
Complete the application thoroughly: Fill out the application in its entirety, providing accurate details on the hardship you are facing, the length of forbearance you need, and any other requested information.
Gather supporting documents: In addition to the application, HSBC requires documentation that provides evidence of your hardship. This could include pay stubs, doctor’s bills, childcare receipts, unemployment paperwork, or other relevant documentation.
Submit application and documents: Send the complete application and your verification documents to HSBC through the method specified. This may be via mail, email, or their online portal.
Follow up as needed; You may need to follow up to provide any additional documentation if requested. Respond promptly to ensure efficient processing and approval of your forbearance request.
Get approval: Finally, HSBC will review your full application along with the supporting documents and render a decision on your eligibility for mortgage forbearance. If approved, you will receive detailed terms.
Be sure to follow all steps fully and accurately for the best chance of qualifying for payment relief. HSBC aims to process requests as quickly as possible during these challenging times.
Weighing the Pros and Cons of Mortgage Forbearance
Pausing or reducing your mortgage obligation for several months through forbearance can certainly help alleviate financial stress. But before pursuing this route, consider both the potential pros and cons:
Pros
- Avoid late fees and foreclosure during forbearance
- Pause payments entirely or pay a reduced amount
- Time to improve your financial situation without penalty
- Less stress about making ends meet each month
- Continue living in your home during hardship
Cons
- Interest still accrues during the forbearance period
- Total amount owed remains the same
- Potential impact on credit score
- Loan repayment term may be extended
- Monthly payments resume eventually
While forbearance has its benefits, it is not without drawbacks. Make sure you have a plan for eventually repaying the full amount owed and resuming normal payments. But for many, the pros outweigh the cons for short-term relief.
What to Expect When Mortgage Forbearance Ends
Mortgage forbearance is designed as a temporary hardship solution. It does not remove your requirement to repay the mortgage – it only pauses or reduces payments for a limited time. So what happens when the forbearance period concludes?
In most cases, borrowers will be faced with three options:
Resume regular payments – If your financial situation improves and you can afford the regular monthly payments, you simply resume those payments where you left off before the forbearance period.
Repay in a lump sum – Missed payments during forbearance must eventually be repaid. HSBC may require you to pay the full amount owed in a lump sum payment.
Extend loan term – Rather than pay a lump sum, HSBC may give you the option of extending the loan repayment term in order to make up missed payments over time. This means making your regular payment for additional month.
Be sure you understand the repayment obligations and options based on your specific mortgage agreement before the forbearance ends. That allows you to budget appropriately.
Alternatives to Mortgage Forbearance
While mortgage forbearance with HSBC can certainly provide temporary financial relief during the COVID-19 crisis, it is not the only option available. Depending on your unique situation and resources, you may want to consider:
Refinancing: By refinancing your mortgage into a new loan with better terms, you may be able to reduce your interest rate or monthly payments to a more affordable level.
Loan modification: Your lender may be able to modify your existing loan by extending the repayment term, reducing your interest rate, or making other adjustments to reduce your required monthly payments.
Home equity loan: If you have sufficient equity in your home, a home equity loan or line of credit could give you access to lower interest rate funds to help supplement your payments.
Home sale: As a last resort, you may need to consider selling your home if you are not able to get back on track with payments through other means. This can relieve the mortgage burden.
Be sure to discuss and evaluate all options with your lender to determine the most appropriate solution for you. Mortgage forbearance provides temporary relief, but you may find an alternative that works better in the long run.
Getting Support and Answers from HSBC
Navigating mortgage forbearance and hardship programs can be confusing, especially when you are also coping with illness, job loss, or other life disruptions. Know that you do not have to figure it all out alone.
HSBC has dedicated mortgage assistance teams ready to guide you and address all your questions. You can call their support line or connect with your mortgage officer directly. They can explain eligibility, terms, repayment details, and alternative programs in full to help you make an informed decision.
Ask any and all questions you may have so you fully understand the mortgage relief process. HSBC aims to provide exceptional customer service and keep homeowners informed. You may qualify for more options and assistance than you realize, and there are many unknowns to clarify in this unprecedented time. Avoid guessing by getting the facts straight from your lender.
Conclusion:
Forbearance is just one of several options to explore for mortgage assistance. Consider the pros and cons carefully and discuss alternatives with your lender as needed. With an informed, well-planned approach, you can work with HSBC to handle temporary hardship while still fulfilling your long-term mortgage commitment. Their team is ready to support you each step of the way.
FAQs:
How long can I get mortgage forbearance from HSBC?
You may qualify for up to 6 months of mortgage payment relief from HSBC. The specific duration depends on your financial situation.
Does forbearance hurt your credit score?
It may have a small negative impact but likely less than missed mortgage payments would. Check your credit report.
What if I can only pay a portion of my mortgage payment?
You may be able to get partial or reduced mortgage payments approved by HSBC based on your individual hardship.
Are the missed payments forgiven?
No, you still owe the full mortgage amount and any payments paused will need to be repaid down the road.
What if I am denied mortgage forbearance by HSBC?
If denied, ask why and discuss alternative modification or assistance options with your HSBC mortgage officer.
Can I extend the forbearance if I still cannot pay after it ends?
You need to reapply near the end of the initial forbearance period if your hardship continues and you need extended relief.
Are there eligibility criteria?
Yes, you must have a HSBC mortgage, be current on payments, and provide documentation of a valid COVID-19 related financial hardship.
What are my alternatives besides forbearance?
Instead you could potentially refinance, modify your mortgage, take out a home equity loan, or sell your home as needed.
How do I apply for mortgage forbearance?
Contact your HSBC mortgage officer, request an application, provide hardship documentation, complete the application, and submit it for approval.
What happens when the forbearance period ends?
You either resume normal payments, repay the missed amount in a lump sum, or make up payments by extending the loan term.