self employed mortgage declined by HSBC- now appealing

2010omnia

I'm self employed in my early 30s. been in a mixed of PAYE and Ltd in the past 4 years.I'm a qualified accountant working in risk management consulting area.

yr1 49k (PAYE)
yr2 52k ( Ltd, profit)
yr3 21k (PAYE, only worked 4 months as I took time off for travel)
yr4 74k ( Ltd, this is 09-10 projection on Ltd, a 3 month rolling contract -been extended for 4 times with the same employer as this is the common practice and the contract is likely to be extended due to the nature of my work- risk consulting)

no debts, have 2 credit cards but paid off every month.
all accounts (business and personal accounts are with HSBC for many years)
Mortgage amount :£165k, LTV 45%
mortgage : 1.99% life tracker for 25 yrs fee 999 monthy payment £740.00
Premier account holder

provided last 4 years tax returns , proof of employment.
mortgage manager accessed my detail and was sure no affordability issue,
no credit issue.
but she needed to send my case for the underwriter due to my self employed status.

it got declined by the underwiter on : income unsustainable....

My mortgage manager said my case has been sent for appeal will need to wait as they were confident the reason of decline is unreasonable.

Has any one experienced anything like this , shall i try other banks ( called Halifas, seems they can provide AIP over the phone just based on information provided and can submit full application for me over the phone then to proceed for survey etc etc- a bit too good to be true?!!)

Shall I wait for the reply of HSBC or shall I apply for other banks while waiting ,knowing that it will leave a credit check print on my file.

your advice is highly appreciated!!! thanks !!

Dan_1976

Get ready for a fight on this one!

74k is a projection, I know its contracts and they look solid, but, it is a projection.

So take and average of the last 3 years plus a big dip in year 3 and I can see why.

THey dont know your business, they dont know that in year 3 you took it easy but are working harder now. They look at the cold facts. You will need to show your life story to get this one through.

I would be ready to move to another lender that may be more flexible. Thing you also need to remember, customer facing staff are always positive, and will, if its right or wrong, say what you want to hear. Not all the time, but they do cos they are human.

HC13

Go elsewhere HSBC...waste of time

_Andy_

HC13 wrote: »

Go elsewhere HSBC...waste of time

Wow, very informative.

HC13

Sorry, have a very young baby on lap and just had a nightmare with HSBC myself. If I have time later, I will study your case and give my opinion (not advise) later.

But wanted to bump it

Radsteral

indeed very informative
same as Omina , with hsbc accounts
first year 55k
second year 67 k
third year 65 k

this year ,already banked some 50 k projecting for around 80 k

,they said the same to me

Omina-they are too many banks there.. hsbc is just picking up the clean and clear as cristal clients and i dont think we should just wait for them
being their client for ages seem to have the negative effect aswell i understand

Thrugelmir

2010omnia wrote: »

I'm self employed in my early 30s. been in a mixed of PAYE and Ltd in the past 4 years.I'm a qualified accountant working in risk management consulting area.

yr1 49k (PAYE)
yr2 52k ( Ltd, profit)
yr3 21k (PAYE, only worked 4 months as I took time off for travel)
yr4 74k ( Ltd, this is 09-10 projection on Ltd, a 3 month rolling contract -been extended for 4 times with the same employer as this is the common practice and the contract is likely to be extended due to the nature of my work- risk consulting)


provided last 4 years tax returns , proof of employment.

it got declined by the underwiter on : income unsustainable....

A detached view.

If you were truly self employed you would be running your own business not contracted to supply services (under PAYE).

Self employed people don't have the luxury of taking time (6 months?) off work for travel (yr3).

3 month rolling contract, so income projection is just a forecast.

Doesn't give any suggestion that income is sustainable in the longer term. And employment is of a stable nature.

Conrad

You need a progressive small lender with the Human touch.

You might struggle with the large lenders as your case would be one of those that doesn't fit thier standard template.

RX-78

We are in a very similar situation (but probably worse) with HSBC and just finished filling the application form. The mortgage advisor seemed confident but I'm now worried after reading your post.

I've just became selfemployed with only 4 months of trading. As my only cost is professional indemnity & fuel bills and I have a subcontract in place, my net is (well except sickness) £40k net. I'm also joining a business partnership (which has been trading for over 30 years) in the summer with last 3 years profit in excess of £60k net per partner. The partnership's accountant is happy to disclose their book to the bank as well. Prior to that I was employmened (in the same sector) for several years earning similar kind of wage.

My wife earns £24k net employed and has been for last 8 years since leaving college.

We have no loans, no dependants and 2 credit cards which we pay off every month. We've had mortgage for last 8 years and not missed any payment. As far as I know our credit is clean.

We've got 25% deposit and borrowing about 230-250k. If you are getting turned down on 45% LTV, sounds like we have no chance..... will let you know next week!

property.advert

The OPs actual business shows declining profits. This is not acceptable. The PAYE in year 1 is better than the higher Ltd amount in year 2. Year 3 is a disaster and year 4 is just made up numbers.

After filing year 4 accounts and having a reason for year 3 (such as extended vacation) he might be ok.

2010omnia

hi everyone
thanks for your advice.
I have not got any news from the appeal- been on a business trip but been chasing up the result.

I believe banks should put eligible criterias clearly for the contractors / self employed before the application is allowed.

It is likely that i cannot get the mortgage but if that is the case then I just have to keep saving till the day i can buy it with cash..............