Mortgage appeals

jassco

Hi all,

Me and my OH applied for a mortgage last week after having an offer accepted on a house. Found out today that the mortgage was declined. First of all, our situation is outlined below:

My income: £13.3k (tax-free)
OH income £25k
Deposit: £17k (saved ourselves)
House price: £130,000
Mortgage: HSBC 2-year fixed @ 5.99% over 30 years
No loans
No credit cards
I have an interest-free overdraft that is £1700 overdrawn, but stated I'd happily pay this off (money is in a savings account making me a tiny bit of interest)
Both have decent/good credit ratings (never missed any payments)

My situation is that I'm a PhD student with a guaranteed income of £1107.50 per month running up until January 2012, whereas my OH is in a secure job working as a graduate health professional. We were told by the branch manager that as my income is guaranteed, they'll treat it the same way as being on a fixed-term contract.

However as I said before, the application was turned down on the sole basis that come 2012, I'm not guaranteed a job. To me, this seems ridiculous as this must mean that any person on a fixed-term contract (and there are lots of people on these), will be unable to get mortgages at the moment.

The mortgage manager at our HSBC branch phoned me and said that after speaking with the bank manager, they're wanting to appeal the decision. The argument for this is that I'm just as employable as other people in fixed-term contracts, and due to the amount that we're lending I would only need a minimum wage job to make up the income multiples anyway come 2012. The other part of the argument is that someone in a permanent position can lose their job tomorrow in the current market, whereas mine's guaranteed up until 2012.

Does anyone else have any experience of mortgage appeals, or think we stand a decent chance with the appeal? Also has anyone had success with applying for a mortgage when on a fixed-term contract?

Thanks,

J

benjamin.a

No experience with HSBC as they do not use mortgage brokers...
I have heard that HSBC are declining about 70% of applications for a various number of reasons. (The one you have unfolded seems the most bizarre i have heard yet)

Really good luck and let us know how you get on.

jassco

benjamin.a wrote: »

No experience with HSBC as they do not use mortgage brokers...
I have heard that HSBC are declining about 70% of applications for a various number of reasons. (The one you have unfolded seems the most bizarre i have heard yet)

Really good luck and let us know how you get on.

Thanks, the next option after appeals is to apply somewhere else I guess but this time through a broker who will be able to tailor the application for my circumstances. I know our credit scores will take a hit, but it's either that or rent for over 2 years until I finish (and most likely get a fixed term contract in research :rolleyes:)

benjamin.a

something to consider could be applying for a personal loan to boost your deposit to 15%. At 15% you have better rates and a plethora of lenders to choose from.

_Andy_

benjamin.a wrote: »

something to consider could be applying for a personal loan to boost your deposit to 15%. At 15% you have better rates and a plethora of lenders to choose from.

Pretty bad advice given no lender is going to accept a personal loan as a deposit.

benjamin.a

thanks andy... the comment was not advice but simply something which many first time buyers are doing at the moment... i assure you that this has been done and FTB's will continue to do it until 90% lending returns.
I am not here to offer mortgage advice, more personal advice.

If i was a first time buyer today... (and i couldn't get my mortgage through with HSBC)... i would rather take a small unsecured loan, boost my deposit to 15% and pay 5.88% fixed 2 years with Nationwide, than pay the 7% that the other lenders are quoting.

Is this moneysavingexpert.com or andythecomplianceofficer.com?

jassco

It's certainly something for us to consider, but at the moment we're saving £2,000 a month (both living with parents), so it'd only take 3 months to make up the extra £6,000 needed for a 15% deposit (including the fees of buying a house) rather than go down the road of more loans for a number of years.

Another option would be for us to ask family members for a short-term loan, but would having the extra 5% deposit actually make it that much easier to get a mortgage with another lender in this climate?

_Andy_

I'm well aware that it happens, but as a mortgage adviser to suggest it as an option when you know no lender will accept it unless the applicant lies about the source of funds is pretty unprofessional.

samay007

having a good credit and more than 10% deposit would definitely get a mortgage, but don't apply for personal loan to boost up the deposit (that will not work - lenders would reject straight away)

there are other main steam lenders who can provide.. try not to do so much search on your credit file

jassco

samay007 wrote: »

having a good credit and more than 10% deposit would definitely get a mortgage, but don't apply for personal loan to boost up the deposit (that will not work - lenders would reject straight away)

there are other main steam lenders who can provide.. try not to do so much search on your credit file

I'm trying to find the right mix between lots of applications and getting the mortgage. I won't be applying for more than one at a time, but if I don't get one I figure I'll have a couple of years to build my credit rating back up whilst renting until I finish the PhD.

When you say more than 10%, are you referring to 15%, or would say applying with 13% work in our favour? What I'm thinking is that by the time we come to signing and paying the deposit, we'll have another £2,000 from our next wages. I'm aware that the next multiple looked at is 85% after 90%, but maybe the extra few % will look better on the application?

Bufger

benjamin.a wrote: »

thanks andy... the comment was not advice but simply something which many first time buyers are doing at the moment... i assure you that this has been done and FTB's will continue to do it until 90% lending returns.
I am not here to offer mortgage advice, more personal advice.

If i was a first time buyer today... (and i couldn't get my mortgage through with HSBC)... i would rather take a small unsecured loan, boost my deposit to 15% and pay 5.88% fixed 2 years with Nationwide, than pay the 7% that the other lenders are quoting.

Is this moneysavingexpert.com or andythecomplianceofficer.com?

90% lending is available. If you really are a mortgage advisor you should probably check your system for Natwest, Coventry building society and many more. all at 5.99% 5 year fixed 90%LTV for first time buyers.

Your advice isnt the best ive seen on here. if you are actually a mortgage advisor please consider the advice you're handing out before doing so as you could be pointing people towards trouble.