HSBC's 'decision in principle' was ridiculously wrong.

Eejay

In January my husband got a 'decision in principle' from HSBC. He has a flat in Sheffield which he rents out - he never intended to rent it out but struggled to sell it. It's not a BTL because he doesn't meet the criteria so he pays an extra 2% on it as a result. He's got £73,000 left to pay and it's worth about £100,000 (or just slightly over). This was taken into account, including the fact it has a tenant in for two years and he's getting £5,700 a year from it. We were told he'd get up to £85,500 towards a new property if we sold our current flat, which he owns outright thanks to help from family.

We put the other flat on the market and we received an offer in just a few weeks. It's almost at the stage of signing contracts so we've been looking elsewhere whilst living in rented accommodation so that we weren't part of a chain. The 'decision in principle' expired at the end of April so we booked another appointment, knowing the rules had changed but the person in the bank was confident we'd get around the same figure at the next meeting. We put an offer on a place yesterday based on this, even taking a pessimistic attitude that we might only get £60,000 with the new rules just so that we didn't stretch ourselves too far. Our offer of £132,000 was accepted. With the sale of our flat, we are expecting to have around £90,000 left to use as deposit and upgrades after other fees.

Today we had the appointment at the bank. We were told he'd get £40,000 - less than half of what he was told just a few months ago. There were a few additional expenses taken into consideration, but the major factor was that they wouldn't take into account the Sheffield flat as it wasn't a BTL. We are absolutely livid. I know we perhaps should have waited until after the appointment to make the offer, but I'm still furious that the last decision was hugely out. If my husband had known he'd get so little, he would have held onto the flat and rented it out rather than selling it, as we've been paying for things like council tax whilst it's been empty. I'm 7 months pregnant and we were hoping to have a place lined up to give our baby a good start in life, but instead it looks like we're going to be stuck in a less than ideal rental property that we only ever intended as a temporary measure. I know the 'decision in principle' is not a guaranteed amount, but it's so far out that they may as well have just picked a random number.

What do you reckon we should do? Is there any hope of this working out well, or should we just accept we're not going anywhere soon and withdraw our offer?

Leon_W

There are lenders other than HSBC out there !


You seem to have written everything off at the first obstacle.

Eejay

True! My husband is looking online at the moment, but the trouble is getting an appointment. He works during the week and there are very few Saturday appointments available - even last month he was told the next one for some banks wasn't until July.

He's wondering whether he can change his mortgage to a BTL elsewhere (Yorkshire Building Society doesn't give him that option and he doesn't meet the criteria at HSBC) or if paying it off entirely would allow him to lend more.

amnblog

Use a broker who can work with you at a time to suit you.

Thrugelmir

Eejay wrote: »

Our offer of £132,000 was accepted. With the sale of our flat, we are expecting to have around £90,000 left to use as deposit and upgrades after other fees.

So why isn't around £40k enough.

Eejay

That's what I wondered, but he doesn't want to use up every last penny as it'll leave us nothing to fall back on and he'll have to find the money for the additional fees with this one - stamp duty, all the checks that need doing and cost to move, for example. It also doesn't leave anything at all for improvements - we were hoping to keep £10,000 aside for a new bathroom and kitchen etc but there wouldn't be anything left even for paint. I could tolerate it as is but I'm just so disappointed that someone did their job wrong and we've based so many things on their error.

He is considering paying the holding deposit anyway as he's sure we'll find some way to manage, but I'm really, really cross about it all. Just needed some reassurance, so I appreciate the responses I've had

betmunch

Eejay wrote: »

True! My husband is looking online at the moment, but the trouble is getting an appointment. He works during the week and there are very few Saturday appointments available - even last month he was told the next one for some banks wasn't until July.

He's wondering whether he can change his mortgage to a BTL elsewhere (Yorkshire Building Society doesn't give him that option and he doesn't meet the criteria at HSBC) or if paying it off entirely would allow him to lend more.

What you need is some kind of service where someone knowledgeable about mortgages will act in your best interests and consider a number of different providers so that you dont waste months waiting on a single bank to tell you you dont meet their criteria either.

Well, anyway. Good Luck with your search

ethank

You are assuming that someone has done their job wrong. A decision in principle in January is now 5 months out of date. There was a major change in mortgage rules in April that has affected everybody, the new assessment has probably been completed under the new rules hence the change.

HSBC are probably one of the fussiest lenders out there as well!

Find a broker to help you quickly.

Thrugelmir

ethank wrote: »

HSBC are probably one of the fussiest lenders out there as well!

Or not interested in the business.

Eejay

The person said it should never have been put through that way and if we decided we wanted to complain we should let him know. He never once said that it was because of the changes that came in last month, which would have been more understandable. It may have been done in January (4 months ago) but the paperwork said it was valid until 28th April so if we had put our offer in just a couple of weeks ago we'd have had the same problem once it came to getting the actual mortgage.

He's going to try looking at some of the things that have been suggested so will see how that goes.