HSBC mortgage rejection - should I be concerned

MartinLB

Hi - had the most bizarre session with a HSBC financial planner when applying for a new mortgage.

We already have a mortgage with HSBC, an excellent credit score, and are currently looking to move to a bigger place with a bigger mortgage. Over the phone we achieved an agreement in principle, but when I met with the financial planner in branch, they informed us that we would probably be rejected as we're asking for 3.5 times our joint income. However he advised that we should still apply, as he would write to the underwriters with a case to approve us.

We are concerned that this could have been a bad decision and we should have stopped him making the application - could this affect our ability to get a mortgage with another provider if our case is not successful?

The bizarre part of the process was that he took every expense into account when looking at affordability, for example pet insurance at £20/mo. At the end he said that they expect a higher level of disposable income (<40%) - which would mean that your mortgage payments would need to be incredibly small!

Any thoughts/advice? Do we wait the week for a decision, or back out now?

lightspeed

i would wait. I cant see it having too much (if any) affect on future applications. Several failed attempts might do though.

kingstreet

You aren't going to be declined. You might be offered less, but that's different. You've already been credit checked by now, so you've got nothing to lose.

MartinLB

Just heard back from the Financial Planning Manager at HSBC - the decision is that they will not offer over 3 x salary for a joint application at 90% LTV.

Apparently the branch manager got involved - but the mortgage centre were unwilling to budge, even though it is affordable.

Going to speak with a mortgage broker tomorrow AM.

Little nervous - but when I spoke to the same broker earlier in the process, they were confident they could get us a mortgage, just that we'd be hit with the £2.5k exit fee from our fix.

kingstreet

Martin - at 90% they can afford to pick and choose. You're a bit over-ripe I'm afraid.

Sadly, they can probably work out that for you to get what you need, you'll have to go elsewhere and pay their fee in the process.

They get a few grand ERP and get to lend to a "better" borrower.

DannyboyMidlands

I think you might need to avoid HSBC. They and 1st Direct are very picky with borrowers but to be fair, that's why they're able to offer great rates. On my recent application FD wouldn't go over 2.7 times joint income on a 75%LTV.

However this situation is preferable to the reckless lending of the boom years when frankly my dog could have got a mortgage, it was that easy.

MartinLB

Thanks for the replies... it was a bit of a shock, particularly after I spent an hour going through an agreement in principle. The one saving grace is that it was relatively quick - i.e. I didn't have to wait 6 weeks to find out.

By my sums, we have in excesss of £700 a month left over after all bills (including food etc) are paid, which is over a third of our mortgage payment, so I believe this is very affordable.

Now have to decide if we want to go fix or tracker on our next application.

Thrugelmir

How much where you hoping to borrow?