HSBC Withdraw Mortgage After I Signed Mortgage Offer - Advice Please
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I have been with HSBC in a standard variable mortgage for last 9 years. I moved out 4 years ago, but kept the house and it has been rented for the last 4 years to the same tenant all this time. HSBC would not let me remortgage it privately if the tenant moved out as they say it is not affordable (according the their processes and my earnings). Even though under a new residential rate it would be £200 per month cheaper. For info, my earnings more than cover double mortgage rate I pay them per month.
So, I am keeping the tenant onboard, and moving the mortgage over into a buy to let mortgage instead. This is £100 a month cheaper than I pay now on Standard variable for HSBC, which is £850.
HSBC tell me when I applied by phone, my rent has to be 130% of my new mortgage cost per month, so I put up the rent which is no problem. I get my offer in principle, and then the valuation takes place....no issues I am told by the conveyancing team. I am now dealing with their provider, Total Conveyancing Services (TCS) and I have completed all my paperwork, including signed and sent back my mortgage offer document from HSBC to TCS a few weeks back. New price £735 p/m
HERE IS THE PROBLEM - I get a phone call today 5th Oct from HSBC to say that the mortgage underwriting has only just been done, and the valuer valued my rent per month at £700 for my type of house and the property at £175,000. I am getting £950 per month now for a £735 pound mortgage per month through HSBC. So, HSBC tell me that because the valuer said it's £700 p/m on their valuation, HSBC will only now offer me £105,000 instead of their earlier promised £138000. Even though the house valuation of £175,000 meets their LTV ratio. The problem is with the valuer's rent valuation that HSBC also look at, regardless of whether I have it rented for higher or not.
As part of my application (IVR call requested) I was only told that it was the property valuation that had to come back as correct, and as long as my rent satisfied 130% at completion, there would be no issues. HSBC have suddenly changed their rules it seems
This means they are pulling out because I obviously do not have the difference to pay them. There is some professional negligence here too because 1.) they have offered me a mortgage and I have signed the offer, and 2.) they seem to have done the underwriting after the offer has been sent to me, which does not make sense. 3.) I have paid out £100 to HSBC for the application 4.) £175 for the valuation
Note: Nothing yet paid to TCS for managing all this, of which their work is now nearly done. Who is liable if TCS bill me?
What I believe is that someone has been going back over the files and for whatever reason, decided to withdraw the offer. Obviously they are happy to leave me paying £850 per month as I currently do, but not happy for me to progress into a new fixed buy to let agreement, even though the same tenant has been there 4 years. HSBC will make more money by continuing to take £850 per month from me.
They will also not let me remortgage privately because apparently it is not affordable according to their terms, even though it is £200 per month cheaper than the £850 I pay now, yet they are happy for me to keep paying the £850 per month.
Can I report this to the FSA for professional negligence as for the last 6 months its probably cost me a £1000 in extra mortgage payments. Also, I was never informed on the original application that the valuation is based on potential rent too. I was told it has to be 130% of the monthly mortgage amount, which is now is.
Finally, if TCS bill me, am I liable to pay their services? they themselves even told me all they were waiting for from HSBC was an update as I told TCS I did not want to take out an indemnity insurance policy. They never said there was any issue with any other aspect of the application.
Seeking advice please. Thanks in advance
Chris
So, I am keeping the tenant onboard, and moving the mortgage over into a buy to let mortgage instead. This is £100 a month cheaper than I pay now on Standard variable for HSBC, which is £850.
HSBC tell me when I applied by phone, my rent has to be 130% of my new mortgage cost per month, so I put up the rent which is no problem. I get my offer in principle, and then the valuation takes place....no issues I am told by the conveyancing team. I am now dealing with their provider, Total Conveyancing Services (TCS) and I have completed all my paperwork, including signed and sent back my mortgage offer document from HSBC to TCS a few weeks back. New price £735 p/m
HERE IS THE PROBLEM - I get a phone call today 5th Oct from HSBC to say that the mortgage underwriting has only just been done, and the valuer valued my rent per month at £700 for my type of house and the property at £175,000. I am getting £950 per month now for a £735 pound mortgage per month through HSBC. So, HSBC tell me that because the valuer said it's £700 p/m on their valuation, HSBC will only now offer me £105,000 instead of their earlier promised £138000. Even though the house valuation of £175,000 meets their LTV ratio. The problem is with the valuer's rent valuation that HSBC also look at, regardless of whether I have it rented for higher or not.
As part of my application (IVR call requested) I was only told that it was the property valuation that had to come back as correct, and as long as my rent satisfied 130% at completion, there would be no issues. HSBC have suddenly changed their rules it seems
This means they are pulling out because I obviously do not have the difference to pay them. There is some professional negligence here too because 1.) they have offered me a mortgage and I have signed the offer, and 2.) they seem to have done the underwriting after the offer has been sent to me, which does not make sense. 3.) I have paid out £100 to HSBC for the application 4.) £175 for the valuation
Note: Nothing yet paid to TCS for managing all this, of which their work is now nearly done. Who is liable if TCS bill me?
What I believe is that someone has been going back over the files and for whatever reason, decided to withdraw the offer. Obviously they are happy to leave me paying £850 per month as I currently do, but not happy for me to progress into a new fixed buy to let agreement, even though the same tenant has been there 4 years. HSBC will make more money by continuing to take £850 per month from me.
They will also not let me remortgage privately because apparently it is not affordable according to their terms, even though it is £200 per month cheaper than the £850 I pay now, yet they are happy for me to keep paying the £850 per month.
Can I report this to the FSA for professional negligence as for the last 6 months its probably cost me a £1000 in extra mortgage payments. Also, I was never informed on the original application that the valuation is based on potential rent too. I was told it has to be 130% of the monthly mortgage amount, which is now is.
Finally, if TCS bill me, am I liable to pay their services? they themselves even told me all they were waiting for from HSBC was an update as I told TCS I did not want to take out an indemnity insurance policy. They never said there was any issue with any other aspect of the application.
Seeking advice please. Thanks in advance
Chris
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Comments
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It doesn't sound like they are changing the rules as such.
The rent has to meet the 130% of mortgage repayment threshold.
The crux seems to be what the valuers think the market rate is versus what you think it to be.
Naturally a lender is going to go with the valuer.
They're likely going to get their figure from the rent being paid in the local market for similar properties. Does your rental figure seem high compared to other local and similar properties?
All the stuff you write about the mortgage being cheaper than before is background noise and irrelevant unfortunately.0 -
It doesn't sound like they are changing the rules as such.
The rent has to meet the 130% of mortgage repayment threshold.
The crux seems to be what the valuers think the market rate is versus what you think it to be.
Naturally a lender is going to go with the valuer.
They're likely going to get their figure from the rent being paid in the local market for similar properties. Does your rental figure seem high compared to other local and similar properties?
All the stuff you write about the mortgage being cheaper than before is background noise and irrelevant unfortunately.
Not forgetting when interest rates go up, it will be a lot higher the payments"It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"
G_M/ Bowlhead99 RIP0 -
The HSBC rep told me that as long as my rent is 130% of the monthly payment and my house is valued 75% LTV, it will meet their criteria. I am now getting 950 p/m and not out the ordinary no.
The issue is that now HSBC say they are taking the lenders rental potential as a figure too, even though they said before I am allowed to proceed with the application, my rent must be 130%. This is the point.
Its been paying for itself for 4 years under their variable rates, and as soon as I want to remortgage, they are not interested in helping. If their IVR call stacks up to what I remember them saying, there are big issues as I have been incorrectly advised0 -
exactly, so they cant just keep me cornered in a standard variable rate. Its robbery0
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The HSBC rep told me that as long as my rent is 130% of the monthly payment and my house is valued 75% LTV, it will meet their criteria. I am now getting 950 p/m and not out the ordinary no.
The issue is that now HSBC say they are taking the lenders rental potential as a figure too, even though they said before I am allowed to proceed with the application, my rent must be 130%. This is the point.
Its been paying for itself for 4 years under their variable rates, and as soon as I want to remortgage, they are not interested in helping. If their IVR call stacks up to what I remember them saying, there are big issues as I have been incorrectly advised
It's really no different than a residential mortgage being conditional on a valuation. The lender has to be satisfied the rental income from the property covers 130% of the repayment.
Having one tenant willing to pay £950 doesn't mean most tenants would, just as with house prices and values. The market rate has to be determined.
Where abouts do you live and what type of property is it? £950 pcm for a property worth £170,000 does seem like a high yield for a lot areas and you've said yourself you had to increase the rent to make it reach the 130% level.
I know you're angling this as them just doing it to make more money from you, maybe this is the case but the does appear to be a question over the rental figure. The valuation is a lot lower than your figure. Only you will know if their valuation looks right or not.
At the end of the day they have an independent valuation stating the lower figure meaning you don't meet their criteria so I don't see how it can be disputed.0 -
exactly, so they cant just keep me cornered in a standard variable rate. Its robbery
its not robbery. You are on the mortgage you agreed to be on. If you dont like it, then you are free to move to another lender.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
A few things here, yes the new rent may be high, but only because their terms stipulate so in order to switch products. They don't care that I'm on a variable product now paying more per month even though they know I get £100 less per month than the mortgage costs me. They won't even let me move it into a fixed term residential mortgage as it is currently, as it's not affordable even though the new payment would be £200 less each month. It's unfair banking practice. I'd say fine if I was a new customer, but what if I said I can't pay next month cos I can't afford the £100 top up? Take my house off me or let me switch into a fixed rate. There is financially no reason why they should not allow me to move into fixed term for 2 years other than it's not in their interest0
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In what way is it unfair? That's the mortgage deal you signed up to. If you don't like it vote with your feet, HSBC aren't the only BTL lender in town.0
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Its been paying for itself for 4 years under their variable rates, and as soon as I want to remortgage, they are not interested in helping. If their IVR call stacks up to what I remember them saying, there are big issues as I have been incorrectly advised
BTL mortgages are not covered by the same advice requirements as residential ones. The lender simply has to lay out the options and you choose. So the only complaint you could have is that were given incorrect information. And from what you say, they did advise you of the criteria. It also doesn’t matter that the BTL payment is lower than the current residential one - they’re completely different types of mortgage contract. One is regulated, the other isn’t.0 -
You are on the SVR so can leave a any time without penalty.
It’s their money, they seemingly see you as a risk
Take your business elsewhere - life’s too sort for all the moaning0
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