HSBC Commercial Mortgage Charges

[DanT]

Hi,

 

We run our business as a Ltd company.

 

3 years ago we purchased a commercial property and took out a commercial mortgage through HSBC to fund it.

 

In July 2009 funds were gettting tight so we went back to the bank and they agreed that we could change to an interest only mortgage for six months.

 

Since July we have been charged £50 a month by the bank for "monitoring our account".

 

We are now repaying the capital back on the mortgage as we were before July 2009.

 

HSBC say they will stop charging us the £50 a month if we sign another debenture to secure the mortgage against all other assets in our company as well as the property.

 

Are they allowed to carry on charging this £50/month?

Could we put in a claim to get back the charges we have paid since July 2009?

They are also threatening to call in the loan if we don't sign this extra debenture, can they do this? We haven't done anything wrong have we?

 

We feel that they are just trying it on and have no grounds to make us sign this extra debenture or charge us £50 per month.

 

Any advice will be much appreciated.

 

Dan

[Castlebest]

Hiya DanT and welcome to the HSBC forum:).

Since July we have been charged £50 a month by the bank for "monitoring our account".

 

Did the bank ever say why this was necessary or what they were doing to earn this money? £600 a year is a lot of money to "monitor" an account, I think its more likely you have an inventive business advisor at your branch.

 

HSBC say they will stop charging us the £50 a month if we sign another debenture to secure the mortgage against all other assets in our company as well as the property.

 

Have you asked why this is suddenly necessary when it wasn’t before July 2009? again I think its more likely you have an inventive business advisor at your branch.

 

Banks are just another supplier to any business, they supply you with banking services, and they should be treated just like any other supplier. If their "goods" are getting too expensive look for a new supplier and tell them they will loose your business unless they can compete.

 

I know (and so do they) that changing bank would be a lot of work and hassle that you would rather not have but you have to ask yourself... is staying with HSBC worth an extra £600 a year or adding further security to your existing loan agreement when you get nothing in return?

 

I think you need a meeting with the bank to discuss exactly what the "monitoring" fee they have been charging you since July 2009 is and what they do to earn this money. Also why they now seem to need additional security on a loan that has reverted to the same basis it was granted on.

 

As for the threat, I think you will find they are allowed to recall loans but they would need a reason (you need to check your loan agreement to see exactly what these clauses say) but if you have a sound profitable business I agree with you that this is just a threat.

 

pete

[DanT]

Thanks Pete,

 

The £50 was because they so say had to keep checking our account to make sure we could continue to make the loan repayments.

 

Apparently the debenture should have been in place from day 1, but due to a mistake by the bank it was not included in the terms. We just feel that they are looking for the extra security because of what has happened over the past few years with property prices.

 

We are looking into taking the bank account elsewhere.

 

I have looked through the loan agreement and can't see anything that we have done wrong to allow them to recall the loan. We are just worried that if we refuse to sign the extra security they may recall the loan which we would be unable to repay.

 

Thanks,

 

Dan

[Castlebest]

The £50 was because they so say had to keep checking our account to make sure we could continue to make the loan repayments.

Think I would ask them why they expect you to pay for their risk monitoring proceedures... its not something you have asked for.

 

Apparently the debenture should have been in place from day 1, but due to a mistake by the bank it was not included in the terms. We just feel that they are looking for the extra security because of what has happened over the past few years with property prices.

It was not included in the terms... so its not part of the agreement, baring in mind I think the £50 a month to run their own proceedures is a cheek in the first place I would be asking them what they are willing to give you in return for the extra security.

 

I have looked through the loan agreement and can't see anything that we have done wrong to allow them to recall the loan. We are just worried that if we refuse to sign the extra security they may recall the loan which we would be unable to repay.

If they do this it would ruin your business... it would ruin any business at any time let alone in the current comercial situation. I think the only recorse you have is to threten them back... tell them that if thy do this without a reasonable cause you will report them to the FSA and send your story to the national press.

 

The government is despreate for the banks to lend more money to business and I dont think proof of a bank doing exactly the oposite will sit very well with anyone. I know its not a very positive corse of action but nor is the banks threat to withdraw your loan unless you sign on the dotted line.

 

Hope that helps a little

 

pete