Will my HSBC mortgage be rejected with this criteria

myk3

Like most we met with HSBC to enquirer about a mortgage due to their outstanding deals. The one that appealed to us was the life time tracker simply because of the “life time” part and the fact it is a great rate.

It is a joint application with both my partner and I and our financials are as follows:

She is working full time with a salary of £15,000 PA.

For the past 3 years I have been a company director with 50% shares which a friend and myself started. Year one was very slow and we were still employed (PAYE) with our previous employer before we made the brave leap to fully start on our own business.

The past 3 years for business accounts activity:

Year 1 – Net Profit 10k (~£8k after taxation). £0 dividends drawn, £0 salary taken and £8k retained profit.

Year 2 – Net Profit 60k (~£48k after taxation). £21.4k dividends drawn, £10.5k salary taken and £35k retained profit.

Year 3 – Net Profit 106k (~£85k after taxation). £76k dividends drawn, £13.5k salary taken and £44k retained profit.

Note that the above figures (inc salary’s and dividends) would be 50% mine and not the full amount.

A projection of year 4 (which of course can’t be taken into consideration) would be around 5 – 10% increase on year 3.

Both my partner and I have a tip top credit rating, no credit cards, store cards, never are over drawn or in our agreed overdraft, our out goings are very minimal and our leisure spending pattern is not out of the ordinary.

Together both my partners and I have saved £140k over the years of which ~£130k is to be used as the deposit of the mortgage. We have had an offer agreed on a property and need roughly £195k loan value.

We had a AIP before we started looking for a property and because of the low Y1 figures the amount we could borrow was a little lower than what we wanted but the mortgage manager said that they would put our case forward using 2 years only which should be accepted due to the circumstances and the year on year growth of the business. This AIP was a lot higher than the loan that we now require.

I recently met to apply for the mortgage and then was told that the underwriters will ONLY accept 3 years multiplied by ~4.5 or so. Now as year 1 was near none existent and the fact that we kept money in the business as retained profit this has come back to bite me in the butt. Had I taken a little more dividend in year 2 and 3 we would have been fine.

Based on our current situation I was advised that we have a good case. The mortgage manager also said that they wouldn’t put it across to the underwriters if there was no chance of being accepted.

I guess I am going to just plan ahead now as if it is already rejected and look at other lenders next week to prevent further disappointment.

However it would be nice for other peoples input and their experience possibly with a similar situation to me... maybe there is hope

All the best!

ACG

I dont think HSBC will lend you what you need, i think theyre pretty strict on their criteria - the only way of knowing is trying to speak to an underwriter - although im not sure they will do that.
There will be lenders but they will have different deals to HSBC - some of which may still be lifetime trackers.

myk3

Just to update. We were approved for the full amount... Also thus far we have received great service and comms...