HSBC loan

[jb5000]

Hi everyone,

I'm sorry to start another thread on loans etc. but there is one question I can't seem to find answered anywhere else.

A lot of literature quotes the maximum HSBC loan as £50,000. I have got through onto the APP at oxford, and I am looking for a loan to cover approximately £60,000 with the remaining £15,000 being funded by me. (Taking into account living expenses etc.)

Has anyone had any experience as to whether HSBC are willing to extend the maximums that are in place?

As to my personal circumstances I am just leaving university with a decent degree, and the security would be in the form of my parents house.

Any help would be greatly appreciated,

James

[pherbert]

Good comment James,

I would be keen to find the answer to this question also, if anyone could help please make a post. I am sure HSBC can't be the only bank prepared to assist in this situation. There are people who use a multitude of credit cards for frivolous spending and end up being in excess of £50k's worth of debt, so I can't believe the banks can be so restrictive with their terms.

You have very helpful parents I must say.

[purmus]

James,

I currently work for HSBC although I will be leaving to start training at Oxford next month. There is no limit to the amount you can borrow on a Professional Studies Loan but what you must remember is that this type of loan is unsecured. The reason why HSBC are the only Bank to offer this type of loan is that the exposure to risk is so high.

The £50,000 limit is actually based on a business agreement between HSBC Oxford Branch and OAT. In theory, the amount you can borrow is only limited to the full course fees plus £5000 for living expenses.

Providing you can prove that you need the funds for the training and have the means to pay it back, its purely at the discretion of the manager at your local branch.

If you are looking to borrow higher than £50,000 you will probably be expected to put forward a substantial sum of your own money, eg I was asked to put in just less than half for my loan of £45k. Also, any type of security will help, whether it is property or a guarantor such as parents. The less risk you impose on the bank the better your chances.

Please note that this information is purely from my experience in the past with these types of loans and is for information only.

Hope it helps.

Purmus

[jb5000]

Purmus,

Thanks for your really helpful reply.

Would you think that I might stand a chance of getting a larger loan from a non-Oxford branch then?

My dad rang them the other day as he wanted to know his position with regard to being a guarantour etc. and the manager seemed quite adamant that £50,000 would be the maximum. This means I would have to work for a year or two before starting the APP.

I'm not sure why this really makes sense, as all I would be doing would be working pretty tedious jobs for the next year or so whilst saving up the cash. I would also have to resit the selection process for Oxford. I appreciate that they are trying to manage their risk, but surely if they are prepared to lend £50,000 then it makes sense to loan £60,000 so that I would actually be able to start the course!

The manager did mention that in exceptional circumstances there might be a possibility of extending this limit. He said that this could be a letter of recommendation from a current airline captain, for example. How an 'ab-initio' student is going to get this recommendation however is something I have been puzzling over.

I suppose the best thing I can do is write out my business plan and give it my best shot. The worst thing that can happen is that I get declined and end up working for a couple of years, which is what I would do if I hadn't applied at all.

Thanks again for your help,

James

[purmus]

James,

The manager at the Oxford Branch will deal with OAT students regularly so he'll have his own limits in place. If you try a branch elsewhere I found that the person you deal with may not know as much about the course or the type of loan as the manager at Oxford. This could work in your favour as they may not have as strict limits as to the amount. You have nothing to lose by trying it. At most it will take an hours meeting at the branch.

Another thing to consider, which is likely to be a much easier way of getting a sizeable loan is to take the loan out in your dads name. By doing this he can take advantage of the equity in the house with an equity release loan. This would obviously require the full backing of your parents but it sounds like you already have that. Ask for a Financial Planning Review from the branch and mention that this is what you are looking into

As long as you have the full backing of your parents there will be a way to get more money and probably at a cheaper interest rate. The equity release option is available at other banks as well so if you go for this make sure you shop around for the best rate.

When discussing this with the Oxford branch please do not mention where the info came from. Just say you read about it ;)

[Soliciting Stu]

Hello James.

A few musings to keep you going.
When you talk about lending such a large sum of money such as £50,000, the Bank will want security, usually a charge against your parents house. I understand that the HSBC Professional Studies Loan is officially unsecured, but it covers other professions such as law where the amounts would be smaller and the professions less risky. With £50k and a mention of a pilot career, the loan will need be secured!
Using your parents property as security is not as risky as some may say, providing they know about it of course! If you get into difficulties, you would need to talk to them, but the bank realising the value of your parents house is a very, very last resort.

With the equity release schemes, be very wary. They involve your parents signing a portion of their house over to a company in exchange for money. The interest charged by the company is very high, and is charged for the rest of your parents life span. Also, you will not be able to 'buy back' that portion of the house since it will be forever owned by the company. It is not a loan!

I know of someone who managed to loan £48,000 with HSBC with security, but only £5000 of savings. He put the leg-work in, mind you, visiting an awful lot of branches with many knock-backs.

Good luck!

[Jelly Doughnut]

James
The HSBC branch in Hythe, near Southampton, organise study loans for the guys going through CTC at Dibden. CTC have various schemes, the ab-initio one is somewhere around £65K all-in. If you speak to the branch and explain that you've passed OAT selection, they might apply the same criteria to you as they do to their CTC customers. Lady to speak to is called Linda.
cheers :ok:

[jb5000]

Hey everyone,

Great thanks for all of your help, I'll be investigating it all over the next couple of months!

If I do succeed in getting a larger loan I'll post on here so people will get a better view as to whats available and how to go about getting it.

Thanks again for taking your time to reply,

James

[sexybeast]

Hi,

I'm starting the Oxford APP in June and have been given a £60,000 loan from HSBC (Bedford). My parents (thankfully) also agreed to use their house as security.

I'd agree with what the others have already said, it all depends on the manager who deals with your application and your circumstances.

If you have any other questions, send me a personal message.

Cheers

T

[Spetsnaz]

Please avoid getting a large loan. It looks so easy to do and you will be thinking how easy it is to pay off but you will be --- WRONG! ---

In reality you will take a long time to be in a position to pay off even a quarter of what you have been given!

I took out a student loan and then managed to find successively better jobs, but it was a huge drain having to pay most of my disposable income back to a bank. I didn't have money to enjoy being employed and the debt seemed to decrease very slowly.

If I could choose again I would not get a loan from any bank.

You will be boy pilot for a long time and remeber not all pilots make it to the big time paycheck club. Nothing is guaranteed.

DON'T DO IT.

[jb5000]

Hi Spetsnaz,

Thanks for putting in the other side to this argument, and it is definitely something that I have considered. However, I have decided to go for the loan rather than long savings for several reasons.

- I am just about to leave university so I reckon I am in peak learning / revising state to have my best go at my ATPLs. (Please don't think I am saying older guys are worse or anything, its just that given the choice between learning now or in ten years when I have been out of the classroom for a long time, I am choosing now).

- Most graduate scheme jobs have a long contract due to the training that the commit to you, e.g. for ACA / CIMA etc. This would involve delaying my true ambition/dream which is to become a commercial airline pilot.

- Again coming back to the fact that I am just leaving uni I have no financial commitments e.g. mortgage / rent etc. that would make my life difficult should I decide to halt my income for 18 months. Having a family for instance would also make things difficult (again I am not saying that it is impossible for people with mortgages / kids etc. I am just choosing to make my life a bit easier).

- The industry is currently looking good (touch-wood!) and I reckon that OAT are doing really well at placing pilots. As to the industry in 18 months, who knows?! but its definitely better than it was.

- The grad jobs I've been looking at have pretty decent salaries to start off, so making the repayments (whilst obviously not ideal) would hopefully be manageable if I was unable to continue with my pilot training.

Overall I just think that this way is the best choice for me. Everyone has their own individual circumstances, but I just think that spending all that time saving is going to be time wasted at the end of the day as I would be doing a job that I hated for not very much cash.

I hope I have explained my reasoning, and I am open to any thoughts you might have.

All the best,

James

[pherbert]

Well said James

I am just about to finish paying off my student loan from over 5 years ago when I graduated from Uni, and yes it has been a drain but not unmanageable. Since graduating I have managed to buy my dream car, and yes it is an in-comparable amount to OAT fees, but like you say, you need to look at personal circumstances. I am now 27 and don't regret entering the workplace as it has developed me so much, put hairs on my chest as they say....

I am now keen to progress down a similar path to yourself at some great sacrifice, once I have evaluated all aspects of my decison.

If you have your parents backing which I don't have fully then put the pedal to the metal mate

Regards

P.

[F.O.E.]

Hi Pherbert

in similar situation. I finished Uni couple of years ago (now 24) and I wanted to become a pilot sooooooooo much but needed to clear some of the debts from the 4 years of uni. However finding that well paid graduate job near my home that didn't require experience and wasn’t too boring took some time. Nonetheless got there in the end and became a med rep (good money, comp car, bonus) and have halved student loans, paid off graduate loan and paid for 35 hours of ppl. Paying back the loans were important but the most valuable thing that I gained was work/life/management experience (two years & pharmaceutical exam passes) now hopefully if my loan gets approved I will be off to FTE. The important thing for me was getting experience in a role so I knew I definitely had a plan B, now I know if I don't get a flying job I won't be struggling to find a way to payback the loan.

James I urge you to consider trying some sort of graduate management scheme for a year or two........... its not too long and you will do lots of green eyed sky watching but it does give you valuable experience that employers crave and will elevate some pressure when looking for work if you don't find a flying job straight away.

I hope I dont sound patronising but just because you finish uni with a good degree doesn't mean that people will hand out jobs to you..... I’ve been there!!!

anyway off to bed got my class 1 tomorrow and its a long drive

good luck with the loans

flyingonempty

[Jepp]

JB5000

Be warned !

Never, repeat never, take out a loan against your home, worse still someone elses.

j

[go_solo]

Just to clarify, if you drawdown cash from you or your parents house, (i.e. you increase the amount owed against the equity) you can pay this back over the existing length of the mortgage which can be up to normal retirement age.

In addition, you will usually get this at the standard mortgage rate for your bank so it could be cheaper that an HSBC loan which I understand is currently 2% over base rate, however that depends on what type of mortgage and who you bank with.

However I would have to agree with the cautionary messages, borrowing large amounts of money is expensive what ever way you do it....that's why HSBC made £9.2 billion profit last year!!

Some simple figures=

Borrow £60,000 at 6.5% over 11 years

Monthly payments of approx £637.43
Total Repaid = £84,140
Total Interest = 24,140

Work and save for 3 years = £25,000 (that's saving less than £8.5k per year)

Borrow £35,000 at 6.5% over 11 years

Monthly payment of approx £371.83
Total Repaid = £49,081
Total interest = £14,081

The difference is that you pay over £10k less in interest and you have a monthly payment which is manageable even if you're not lucky enough to get that first job in the right hand seat of a jet!

Something to think about.