self employed mortgage declined by HSBC- now appealing

[Deleted User]

I think others are being a bit harsh on the OP here.

Your income is clearly very high compared to most - even after taking a holiday, your average earnings for the past few years show a very tidy income stream!

I really don't see what the issue is. Look at your LTV - it's very good (45%) and you've got a proven track record with the bank that is, on face value, exemplary. You've also got 4 years worth of accounts.

I think part of the problem here is just a totally irrational fear of all self-employed people. Banks seem to think that most self-employed are odd-jobs men who struggle for an income, when in fact many are like the OP and earn a very good income which is relatively stable.

I'm finding this at the moment. I'm PAYE after selling my business which I was a director of for a year. The lender is getting iffy because I've only been PAYE for 2.5 months, even though I'm in exactly the same role I've been in for a year and my job is 99% guaranteed (I'm still the boss and could sack myself I suppose, but there's no-one above me). It's irrational - my job hasn't changed in a year and a half, but the lender is concerned that I've only recently been doing it in an employed capacity, even though all other factors are fine.

Given the number of self-employed people out there, maybe the solution to irresponsible lending isn't to irrationally decline mortgage applications from people without an employed track record, but rather to conduct more thorough checks which would allow the OP to demonstrate they are a very low risk!

Thrugelmir

Deleted_User wrote: »

I think others are being a bit harsh on the OP here.

Your income is clearly very high compared to most - even after taking a holiday, your average earnings for the past few years show a very tidy income stream!

I really don't see what the issue is. Look at your LTV - it's very good (45%) and you've got a proven track record with the bank that is, on face value, exemplary. You've also got 4 years worth of accounts.

I think part of the problem here is just a totally irrational fear of all self-employed people. Banks seem to think that most self-employed are odd-jobs men who struggle for an income, when in fact many are like the OP and earn a very good income which is relatively stable.

I'm finding this at the moment. I'm PAYE after selling my business which I was a director of for a year. The lender is getting iffy because I've only been PAYE for 2.5 months, even though I'm in exactly the same role I've been in for a year and my job is 99% guaranteed (I'm still the boss and could sack myself I suppose, but there's no-one above me). It's irrational - my job hasn't changed in a year and a half, but the lender is concerned that I've only recently been doing it in an employed capacity, even though all other factors are fine.

Given the number of self-employed people out there, maybe the solution to irresponsible lending isn't to irrationally decline mortgage applications from people without an employed track record, but rather to conduct more thorough checks which would allow the OP to demonstrate they are a very low risk!

True self employment by its very nature, has fluctuating income. Establishing a successful business often takes years. With often negligble profits in the early years.

Being employed on short term PAYE contracts or as a contractor through a limited Company. Gives no indication as to continuity of future earnings.

The holiday is a clear example that the OP is expendable to his employer. From an an underwriters point of view. As no self employed person would walk away from their clients for 6 months and expect them to be waiting for them upon their return.

2010omnia

Everyone is be expendable in this world!!! even a full time employee can be sacked at any sec.

I have got proven record of employment . And I shall not be penalised for being able to have a flexible life style and yet still manage to have a career.

Even in the Perm world, Leave of absence exists!!!!..And this is encouraged.
Ironically, after my 6 months holiday, my ex employer still took me in under the credit crunch, but just in PAYE form, then later when the ship was not sinking I went back to LTD!! Like i said , if I cannot get the mortgage then I will start saving more to buy it outright. Guess the loser here is the lender who just lose a good customer who happens to work in their world ^^:D.

Thrugelmir

2010omnia wrote: »

I have got proven record of employment . And I shall not be penalised for being able to have a flexible life style and yet still manage to have a career.

I'm not suggesting that you don't and can't. But you have to accept the rules of the game. You can't have the best of both worlds.

Conrad

2010omnia wrote: »

AYE form, then later when the ship was not sinking I went back to LTD!! Like i said , if I cannot get the mortgage then I will start saving more to buy it outright. Guess the loser here is the lender who just lose a good customer who happens to work in their world ^^:D.

Did you try a broker that accesses smaller specialist lenders for this as I advised early on to you?

2010omnia

No I have not. What exactly is a smaller specialist? those one lending way expensive rates with horribe condition attached? would love to know one or 2 if it is not what i thought.

RX-78

Just to report back on my case, despite 2 more meeting since last week we are still waiting for an answer. The mortgage advisor tells me everyday "its all but approved except for...".

So I'm going to speak to a specialist mortgage broker tomorrow. There is an IFA that's affliated with my professional body union that deals with my profession. She knows a few lenders who understands how my profession works and hence may be less concerned with my status. Unfortunately she can't get anywhere near as good as HSBC rates but hey, better to have a home we like and pay a bit more than have to rent for next few years.

RX-78

We finally got our mortgage approved (pending survey & valuation, touch wood) by HSBC today! We were very surprised it went through after reading recent threads!

Mind you this took almost 2 weeks from formal submission, calling on daily basis for the last week with promised of "it should be done any minute", "I expect it to be done before end of today" etc etc. I suppose given the good rate (base+1.99% tracker with no ERC and unlimited overpayment, £999 booking fee) its worth it.

fabs35

I'm in a similar position to Omnia - self employed accountant (with a mix of PAYE and LTD co. income). My wife is also self-employed. We have high disposable incomes, a good credit history and a substantial deposit.

I have applied for the same mortgage with HSBC - our documents have finally been scanned onto their system and we are due to have a lending decision by the end of this week.

Omnia - if I were you, I would apply to another lending organisation asap. The Woolwich have a good deal - 2.09% above base with a £1500 arrangement fee. However you will need a 30% deposit. They have been wonderful to deal with (I already have a mortgage offer from them however the HSBC product is better) and were very quick to process my application.

Will keep you updated.

2010omnia

Congrats RX-78. I'm still waiting for my long appeal!!! But everyone who is helping me in HSBC all said they are strongly supportive to my application.
I checked with other lenders. HSBC seems to have the best deal at the moment but i cannot really apply for a different mortgage supplier before a formal decision is made otherwise , there will be a new credit check on my report showing for mortgage.

I do not think the vendor is going to wait longer than 2 months for me to resolve the mortgage issue.Also, with all the deals I have researched out there, there is not much benefit of applying a less favorable deal and go through all the pain. Will buy it outright when i save enough then.

p.s. fabs35 I have called woolwich, they already told me that they will not consider my case until I have this year's tax return. They look at last 2 years ltd tax return. unless the person on the help line is giving rubbish info, woolwich is not going to help I'm afraid.
All the best for all who are applying mortgage