Can't port our HSBC mortgage due credit crunch: any suggestions of generous lenders?!

pandapaws · 12 January 2008 at 12:41AM

Hi all!

My first time on the mortgage board, please be gentle! Have been advised to keep it short, something I'm not so good at

, so here's my attempt at a summary:

We've just sold our house for £249,950 and trying to buy for £249,999.
We currently owe £228k-ish on HSBC mortgage, 2 years into 5 year fixed at 4.79%. Redemption penalty around £8k.
Looking to borrow either 95% (237,500) to purchase new house, or 90% (£225k) with the rest borrowed in some other way - first option obviously preferable.
Got loads of debt, (as sig) but all up to date, never a missed payment and we have no problem getting credit. Pay about £1400 a month, half on loans, other half on cards.
Salaries are 41,500 and 37,000 in stable professional jobs.

HSBC won't port the mortgage because their lending criteria has changed recently and we owe too much to be considered. We'll be between £700 and £1200 better off a month when we move in saved fuel etc, but if we don't move we'll be over £2k a month worse off as I'll have to give up work for baby due in March. But they're not interested.

From the figures above, could any of you mortgage experts recommend any companies who are more likely to lend to us? Online, Abbey, Halifax, Nationwide & Barclays gave potential borrowing figures of £225-£320k, but I'm just wondering if any are better than others? Do any others do the equivelant of the HSBC homestart, where the first 3yrs are interest only - we could clear all our other debt in 2.5 years with that.

(Didn't do too well on the short-post front. Full saga is here: http://forums.moneysavingexpert.com/showthread.html?t=677703 for anyone who wants to see an unabridged post!!!)

green1970 · 12 January 2008 at 1:40AM

If I were you, I would appeal in writing to HSBC. As part of Treating Customers Fairly (which all lenders will say that they do), lenders must be seen to lend responsibly. You porting across your existing mortgage and not borrowing any more will be the most acceptable route to them - that way you avoid an 8K redemption penalty, they continue to have a first charge on your property for the same amount as at present, with the same amount of equity in the property. Point out that you can demonstrate that whilst your outgoings are high at present, the majority of your unsecured debt could be cleared by the end of the fixed rate if they allow you the interest only route as a temporary measure.

Incurring an 8k penalty can never be classed as treating a customer fairly and you will be so much worse off by switching to another lender both for this penalty and by the increased rates and fees currently being charged. I notice that you are having a baby too - have you taken the drop in earnings/increase in childcare costs in your budgeting - can you really afford to move? Can you show that you've done your sums realistically.

If this is the case and a move is definitely affordable to you both now and over the coming years, appeal to the lender's better nature and demonstrate that you are budgeting sensibly, perhaps by showing the savings you have towards your legal costs, estate agent fees and stamp duty for the purchase, without having to borrow further, showing your payslips, showing your bank statements which prove you do not go over your overdraft limit, etc.

herbiesjp · 12 January 2008 at 10:32AM

Your outgoings are pretty high each month

However there will be quite a few other lenders that can agree this for you, and with most lenders you can set it up on an interest only basis and then change to repayment at any time.

What is your current mortgage balance with HSBC? SO how much are you looking to port? And how much do you need to top up by?

If HSBC do not budge, do you have the funds to pay the £8k penalty

I would suggest getting in contact with a fee free whole of market adviser to make sure that the figures do work in your favour. Just because a lender will agree the mortgage for you does not necessarily mean it is a good thing to do. Also, what do you plan to do once baby is born - go back to work straight away?

_Andy_ · 12 January 2008 at 11:06AM

green1970 wrote: »

If I were you, I would appeal in writing to HSBC. As part of Treating Customers Fairly (which all lenders will say that they do), lenders must be seen to lend responsibly. You porting across your existing mortgage and not borrowing any more will be the most acceptable route to them - that way you avoid an 8K redemption penalty, they continue to have a first charge on your property for the same amount as at present, with the same amount of equity in the property. Point out that you can demonstrate that whilst your outgoings are high at present, the majority of your unsecured debt could be cleared by the end of the fixed rate if they allow you the interest only route as a temporary measure.

Incurring an 8k penalty can never be classed as treating a customer fairly and you will be so much worse off by switching to another lender both for this penalty and by the increased rates and fees currently being charged. I notice that you are having a baby too - have you taken the drop in earnings/increase in childcare costs in your budgeting - can you really afford to move? Can you show that you've done your sums realistically.

If this is the case and a move is definitely affordable to you both now and over the coming years, appeal to the lender's better nature and demonstrate that you are budgeting sensibly, perhaps by showing the savings you have towards your legal costs, estate agent fees and stamp duty for the purchase, without having to borrow further, showing your payslips, showing your bank statements which prove you do not go over your overdraft limit, etc.

Appealing in writing will make no difference and will simply be wasting time - the income/outgoings ratio is well over what HSBC will accept. The OP could write to them but this will just prolong the need to sort something out with another lender.

Charging an ERC is not against TCF guidelines at all.

TEDDYRUKSPIN · 12 January 2008 at 4:00PM

Ok. It seems that you have debt? You have not told us the profit or capital gains you have made on the sale of the property? Would'nt it be sensible to pay these off anyway? 23% credit card? Or keep it and pay 23% and 5% mortgage loan? Not hard to think right?

HSBC is not allowing you to port the current mortgage because you can't afford a £250k mortgage! Simple as that. HSBC, Halifax, Natwest etc all work on a similar principle. If you go beyond their lending criteria, you will just fall foul of going in to debt. Interest only is no longer an option.

No appeal will work.

Pay the early repayment charge? £8k? Or your debt? Simple answer! Your debt. Once you have done this, I can guarantee you will be able to take on the new mortgage loan, as long as you have the deposit you have.

From the above, I guess you won't have a deposit left otherwise this message would not have come about.

Forgot to say. HSBC only offer 95% LTV to graduates and now only 90% to normal clients.

MarkyMarkD · 12 January 2008 at 4:15PM

_Andy_ is quite right. Charging an ERC is completely fair if you choose to redeem your mortgage early. The fact that you cannot port your mortgage because the lender considers your risk unacceptable isn't a reason for the ERC to be waived; the fact that you have an ERC applicable isn't a reason for them to ignore their current underwriting rules.

Complaining won't get the OP anywhere on this one.

Will HSBC not lend you the £320k you require to buy the new property and pay off all your other debts, hence addressing the affordability issues? £320k is around 4 times your joint income which is high, but not completely ridiculous for some lenders.

pandapaws · 12 January 2008 at 4:32PM

We've been into Halifax this morning, and they think they can probably do something, as our affordability is not a problem at all, especially as once we move we'll be at least £700 a month better off than we are at the moment, and at the moment we have no problem paying all our committments and living comfortably. Our debt built up when I wasn't working, but is getting cleared by around £2000 a month now, which is much greater than the minimum payments. If we did homestart, it would all be gone within 2 years. But, if we stay where we are and I can't work, then we get more debt, lower income, and the whole thing gets very messy. BTW, childcare costs not an issue due to our shifts, and I won't have any pay cut when on maternity so long as we can move.

We do have debt - no denying it. That was part of the reason for putting the house on the market in the first place - we should have sold for about £280-290k, but things just haven't been moving, so when the house we wanted to buy dropped their price by 50k to 249, we did the same just to sell and move, as by that stage moving had become an essential due to pregnancy.

We have made the grand total of £2,000 on the property in 3 years, so nothing there to pay off anything. We were initially looking to increase the mortgage slightly (about 8k) to allow for fees etc, but said we'd come up with the 10% deposit if we had to, so that there would be NO additional borrowing, NO increase in LTV, and NO increase in risk as we already owe them the same amount of money but in worse circumstances. But computer says no.

There seems to be 2 totally different opinions on whether or not it's fair for HSBC to refuse to allow us to move. I personally think it's crap, but then I would. They're effectively putting us in a position whereby we'll be much worse off financially (about 2k a month) than if we did move, where we'd be much better off. They refuse point blank to speak to us directly about it, and will only pass messages through the adviser in the branch who thinks it is a ridiculous situation as well. I'll be complaining anyway, but for the moment getting the new mortgage sorted out is priority.

pandapaws · 12 January 2008 at 4:36PM

MarkyMarkD wrote: »

Will HSBC not lend you the £320k you require to buy the new property and pay off all your other debts, hence addressing the affordability issues? £320k is around 4 times your joint income which is high, but not completely ridiculous for some lenders.

Wish they would, but they can do max 90% LTV or puchase price - while the value of the house we're buying is around £290-300k, we're buying it for £250k, so they wouldn't even consider it. Ironically, about half of our unsecured debt belongs to HSBC anyway. Shame they hadn't thought a bit more about their responsible lending criteria when they threw all that money at us when I wasn't working! Our fault for taking it, I know, but it makes a ridiculous situation when they lend you money you can't afford, and refuse to lend you money you already owe in a way to make it more affordable, when you can afford it.

dunstonh · 12 January 2008 at 4:53PM

here seems to be 2 totally different opinions on whether or not it's fair for HSBC to refuse to allow us to move. I personally think it's crap, but then I would. They're effectively putting us in a position whereby we'll be much worse off financially (about 2k a month) than if we did move, where we'd be much better off. They refuse point blank to speak to us directly about it, and will only pass messages through the adviser in the branch who thinks it is a ridiculous situation as well. I'll be complaining anyway, but for the moment getting the new mortgage sorted out is priority.

HSBC are allowed to refuse it. That is a commercial decision and the FOS do not uphold complaints on things done on a commercial basis.

You are well outside their criteria to lend and that is your problem. It doesnt matter what their criteria was in the past and even then it looks like they stretched it. You also dont say how your debt position has changed between the original mortgage and now.

Someone further up mentioned TCF. However, TCF doesnt overide current lending criteria. HSBC are not putting your further into debt. Your choice to move is doing that. You may see benefits of doing it but HSBC do not. A complaint is not likely to change that. Nothing is impossible but you wouldnt expect the complaints team to overide the underwriting decision of their lending dept.

We've been into Halifax this morning, and they think they can probably do something, as our affordability is not a problem at all, especially as once we move we'll be at least £700 a month better off than we are at the moment, and at the moment we have no problem paying all our committments and living comfortably.

Go to a whole of market mortgage adviser. You should be able to get better than that.

herbiesjp · 12 January 2008 at 6:04PM

This is the risk of choosing a longer term deal, with a view to using the "porting" facility.

People need to be aware that "porting" is treated like a brand new application and therefore re-assessed not only on your current circumstances but also on the new lending criteria of the lender

SO there is no guarantee that porting will be agreed for you

Which is why people should think long and hard before opting for longer term deals - not having a pop at the OP, just making sure other posters looking at long term deals take changes in their circumstances into account

MarkyMarkD · 12 January 2008 at 9:06PM

Thanks for that, Herbies. I keep posting that people shouldn't rely on portability - it is a dubious "benefit" put forward by lenders which is so often the cause of dissatisfaction here on MSE.

Unless you know your circumstances won't change adversely with a very large degree of certainty, don't get tied in for longer than your predictability horizon.

Can't port our HSBC mortgage due credit crunch: any suggestions of generous lenders?!

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