Only offered 40% ltv help???

kellysaxo

Hi I have an existing mortgage with HSBC with £25k outstanding. My house value is £95k and I have tried to release another £30k so looking at around £55k in total I went to see them today and they will only offer me at decision in principle stage £39k in total. I earn £16k a year and have a disposable income of £700! They seem to think there is an error on their system so I am booked in for an app anyway. Can anyone shed any light for me? Many thanks Kels xx

ACG

It does not matter what your disposable income is now, they stress test at around 5-6 possibly even 7%.

It does seem a bit on the mean side but without knowing more about your income/expenditure/commitments its difficult to say.

kingstreet

As this appears to be wholly between you and HSBC I don't know that anyone will be able to suggest anything that isn't complete speculation.

Affordability is a function of income, outgoings and mortgage term. The output may be correct, it may not. Only HSBC can answer.

kellysaxo

I am just wondering in your experience with a disposable income of £700 does this offer seem quite low and would you say my disposable income would normally allow me to lend this amount?

kellysaxo

ACG

My outgoings for everything including bills is £414 my basic take home with no commision is £1150

kingstreet

I don't know any lender which calculates what you can borrow from your disposable income.

Try different lenders' online calculators and they pretty much all work from gross annual income, less outgoings. Of course disposable income will be part of the internal calculation, but none of us can tell you what would be required.

ACG

I think Woolwich are the only ones who advise how much disposable income is required although after the email i had today (case failing affordability by a whopping £4 a month)... even that is debatable.

kellysaxo

I thought it was all down to affordability now? And if I did remortgage it would save me a fortune!

kingstreet

It is, but many lenders use Office Of National Statistics figures for outgoings, not yours. They will require abnormal expenses to be reported, such as childcare, student loans, ground rent and service charges.

Like I said, look at different lenders' online affordability calculators and you'll see what I mean...

BTW you might find you get better offers by remortgaging to another lender than you will for an HSBC further advance. Introductory shagpile and all that.

Thrugelmir

What's the purpose of the £30k release?