Turned Down for Mortgage I Currently Have

frannymatt

Just wondered if anyone had any advice?

My husband and I have a mortgage with HSBC. We have held it since 1999 and have never missed a payment. I am self employed and my last 3 years accounts are not great as I was on maternity leave and then worked part time. I've been back full time since March 09 and my last year's income is back to what it was before maternity leave. Whilst my situation may not look great, my husband's position has improved and he now earns over double what he did in 2003 when we last remortgaged. We now want to move to be closer to family, as they will assist us with the children and reduce our childcare costs. We want to port our mortgage and we are not asking for any more or any less, but the bank have turned us down saying we can't afford it. So we're left at our current address continuing to pay the mortgage that we apparently cannot afford and have never defaulted on.

Has anyone got any advice as to how I can appeal this decision or what else I can do? Thanks!

happybroker

It's a rubbish situation altogether but HSBC are really cherry picking clients these days and I doubt that any appeal would be succesfull.

It could pay to speak to a broker who has whole of market access, including direct deals, to have a look at this. They may be able to come up with a different way of pitching it to HSBC than their own "adviser" such as longer terms which you then overpay on etc. Expect to pay a fee though if going for a direct only deal as the lender won't pay them.

Thrugelmir

Could you give us some indication of the value of the house, mortgage etc.

You say you have had the current mortgage since 2003. Is it a repayment mortgage or interest only? As the capital balance should have reduced within that time frame.

frannymatt

Thank you for replying.

We had a mortgage of £100K in 1999 with HSBC, we then remortgaged and moved in 2003 and had a mortgage of £350K of which £125K was on an interest only basis. We then remortgaged again in 2006 and added a further £61,500 to the mortgage to pay off some uncompetitive credit cards. This was on a repayment. Our current combined mortgage is £374K of which £125K is interest only. Our house has sold for £490K and we're looking to buy one for £460K. In 2006, my husband was earning £45K and is now earning £85K plus bonus, which this year was over £10K. My accounts for 07, 08 and 09 show a net profit of £11K, £25K and £27K respectively, but as mentioned above, this was when I was on maternity leave and then came back part time. After my first full year back on a full time basis, my net profit sits at £59K, which is almost the same as it was prior to maternity leave. The biggest stumbling block is our credit cards, which have gone up to £73K as they effectively financed my maternity leave. We haven't used them since Christmas, and are paying off more than the minimum amount in a bid to get our finances under control.

I'm currently writing a letter setting out the savings we'll be making by moving, as we'll be able to pay off the most offensive credit cards, saving nearly £700 per month and will save about £300 per month on childcare but if anyone has any additional advice then that would be great.

Thank you - and sorry for the long winded reply!

worriedindebt

i think the answer lays with your income combined with the credit card debts.

85k + approx 20k (generous average of your income in last 3 yrs.. bonus wouldnt be counted) = 105k x 3.5 = 365k max borrowing
whack on 73k of credit cards and you have to either lose it from the deposit (meaning only 40k deposit and mortgage of 420 which isnt affordable on their probable criteria) if deposit is only 40k ish you are at max LTV too so are a high risk in their eyes.

i think it would be rejected outright as unaffordable.. also interest only would need to have a supporting savings vehicle in place.

sorry to be gloomy but think this is a tough one to place

im not an expert but just basing this on what youve told us and what i know of the mortgage climate

zag2me

Clear the credit cards and you would probably be ok

maninthestreet

In 2006, you borrowed £61.5K to pay off credit card debts, but your current credit card debt is now £73K. As you have said yourself, it's very likely this debt is the stumbling block for getting a new mortgage.

getmore4less

frannymatt wrote: »

The biggest stumbling block is our credit cards, which have gone up to £73K as they effectively financed my maternity leave. We haven't used them since Christmas, and are paying off more than the minimum amount in a bid to get our finances under control.

Simple really you have not been able to afford this mortgage all along

You have been using the credit cards to pay the mortgage.

SouthCoast

If you visit the Debt Free Wannabee Board and post a statement of affairs, they will give advice on how to live within your income.