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    • UnexpectedProblem
    • By UnexpectedProblem 9th Mar 18, 11:48 AM
    • 1Posts
    • 0Thanks
    HSBC Mortage Offer Withdrawn Due To Service Charge
    • #1
    • 9th Mar 18, 11:48 AM
    HSBC Mortage Offer Withdrawn Due To Service Charge 9th Mar 18 at 11:48 AM

    My partner and I are looking to buy a one bedroom new build flat and had our mortgage application from HSBC approved. The offer was for just under 60% LTV and when we applied we were offered a larger loan (by about £40 000 I believe) and therefore it seems that we were not too close to the limit of what HSBC would offer us in terms of loan size. None of the details surrounding the offer have changed since it was made and all calculations of estimated future costs were accurate.

    Yesterday we received notice from our conveyancer that HSBC were planning to retract our offer due to the service charge stated in the contract for the flat. The conveyancer has since been back to the developer's solicitor but has had no luck with changing the service charge details as might be expected. She is also still trying to argue the case with HSBC.

    I will be calling HSBC shortly to see if there is anything that we can do to try and fix what appears to be an affordability issue, however if anyone has any experience with a situation like this then it would be great to hear some more. What is confusing to us is that the service charge has not changed from what we inputted in to the HSBC application and we were previously offered the mortgage, therefore what exactly is the issue? Hopefully my conversation with HSBC will shed some light.
Page 1
    • kingstreet
    • By kingstreet 9th Mar 18, 11:51 AM
    • 33,045 Posts
    • 17,813 Thanks
    • #2
    • 9th Mar 18, 11:51 AM
    • #2
    • 9th Mar 18, 11:51 AM
    It's not affordability.

    It's the level of ground rent/service charge compared to the purchase price, or how the round rent/service charge can increase in the future.

    Lenders are paying far more attention to this now. Here's Nationwide's position, as an example;-

    Minimum acceptable lease term:

    125 years for flats
    250 years for houses

    Maximum starting ground rent on all new build properties with a leasehold tenure is limited to 0.1% of the property value.
    Ground rent must always be reasonable during the lease term. For example, ground rent escalation should be linked to Retail Price Index or similar, and unreasonable multipliers of ground rent will not be permitted, e.g. doubling every 5, 10 or 15 years.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
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