HSBC Mortgage Application - Another Self Employed App Declined

darrinm81

After a two week wait, HSBC have finally informed me that my application has been declined. The mortgage adviser has stated he wishes to appeal to the decision.

Summary of case:
- 5 year business and personal HSBC customer
- Sufficient deposit available to borrow at 70 or 80 LVR (app made at 80)
- 10 years full time solid work history (5 here and 5 abroad)
- Income has been consistent but increased more recently over past 2 years
- I am contractor that has utilised an umbrella structure for the past 4 years and recently shifted to a limited company structure.
- An overseas property that has been rented for the past 4 years in a strong economy. LVR is under 50.

Bank has challenged:
- Recent earnings capacity even though I believe at my lowest or average earnings rate would be adequate to service the debt.
- Future earning capacity even though I have an existing contract until mid 2012 (even though nothing is ever guaranteed - contract or perm)
- Debt ratio on proposed property purchase and overseas even though willing to put up more of a deposit.

I can appreciate I am not the standard case but thought I had a good chance as I had plenty of supporting documentation and have been a customer for past 5 years. Maybe not?

Has anyone appealed and what other borrowing options do I have?

I am worried that a) I will not get financing and/or b) if I look for an alternative vendor will walk away?!

_Andy_

Don't worry too much - HSBC are a very fussy lender. Speak to a whole of market broker who can find a suitable lender.

Leon_W

That doesn't surprise me as HSBC generally don't do anything that needs a bit of commonsense underwriting.

You probably have lots of options but the only way of finding out is by speaking to a broker. Your sort of case cannot be trawled up and down the High Street hoping it will stick somewhere as it could result in rejection after rejection.

Therefore find a broker who will have the knowledge to place a more complicated case.

darrinm81

Thanks. Where do I find good mortgage broker? Do they have to be local to me?

blacksta

have u tried - contractor mortgages

http://www.contractormortgagesuk.com/

darrinm81

Thanks for the suggestions.

After some reading it appears that the high street banks are not likely to lend to contractors. However there are some random cases that seem successful? A mortgage broker specializing in contractors seems like the best option.

Only annoyed I decided to wait so long for HSBC to come back to me! The branch staff came across as being pretty confident with the application but I guess they are 'sales' driven after all. Agreement in Principle wasn't an issue.

I am hoping the appeal process yields something tomorrow but in the interim I will making some calls.

My concern remains how patient will the vendor be now that it the financing part is taking so long, and I don't even know if anyone will even lend to me...

neverdespairgirl

Same with us and First Direct. We wanted 65% LTV, and are both barristers, not fly-by-nights. They still turned us down (or said a max income multiple of 1.6 joint, anyway).

SteProud

Once you have looked at the high street lenders mentioned above, there are specialist contractor IFAs out there who might be useful.

This one is a good place to start - http://www.contractormoney.com/?gclid=CODEo6fg2qkCFQEa4Qod3BCvXA

I do work for an umbrella and a specialist contractor accountant though so i'm not impartial but we do tend to send out guys this way.

Leon_W

There is no big secret to contractor mortgages it is just a case of having the knowledge to know where to place these mortgage requests right first time.

Case in point. Last week had a sub-contractor with only 12mnths history. Now, most high street lenders would run an absolute mile and demand 2 years accounts (as a minimum) because they deem him to be self employed, but one particular high street lender has a little quirk in their criteria where they will treat these as employed and just request an employers reference. This is where a brokers experience is the difference between getting a mortgage and not.

All the best.

darrinm81

I have just spoken with one of the mortgage broker 'contractor' specialists mentioned earlier.

While early stages, they basically said all they need is a contract confirmation letter that states my rate and client; and a current CV. They send this to their senior underwriter mates for a informal decision. If positive, they proceed with an application. You pay £425 on submission but fee is refunded if application is declined.

*fingers crossed*

blacksta

darrinm81 wrote: »

I have just spoken with one of the mortgage broker 'contractor' specialists mentioned earlier.

While early stages, they basically said all they need is a contract confirmation letter that states my rate and client; and a current CV. They send this to their senior underwriter mates for a informal decision. If positive, they proceed with an application. You pay £425 on submission but fee is refunded if application is declined.

*fingers crossed*

Wonderful - Please keep us updated