HSBC mortgage application

binkyb14

Hi,

I'm nearly in tears as I write this.....

After 3 houses falling through due to vendors changing their minds/wanting more money, we have finally secured a house that is great for us.

We have a good income, 30% deposit, minimal debt and very good credit scores.

We've applied for a mortgage with HSBC, £50k less than their AIP. We can easily cover the payments now and in the future at 5-6% interest rates.

HSBC have today declined due to affordability even though our net income after expenditure exceeds monthly repayments by £800. I just don't understand the decision making! I was given the decision over the phone by an administrator and am unable to get hold of the mortgage manager to discuss further.

Anyone else had a similar experience with hsbc? I'm also worried that their decline will be a black mark on our credit ratings.

aaaahhhhhhh...........

Thrugelmir

HSBC have historically always maintained a strict lending policy. They will also a generic affordability model. Not one that's aligned to your personal circumstances. Lenders are now required to stress test affordability at 7% rates. £800 sounds a lot but soon disappears in one off items of expenditure and household expenses.

A mortgage decline shouldn't be an issue.

kingstreet

All that is left is a credit search footprint. Nothing more.

Research an alternative lender/product or consult an independent broker to do it for you.

GMS

HSBC are possibly the strictest lender out there.

A broker would be helpful for you.

If HSBC sold shoes the sign in the wondow would advertise the greatest bargain you have ever seen. However when you got to the front of the queue you would be left disappointed if you were not a size 9,

hounslowfish

You sound like you are good savers. Did you make the mistake I did with my First Direct mortgage? In the affordability questionnaire there is (for FD) a section where you fill in all your monthly outgoings. One box here is for savings. When I applied, I naively included my regular savings as an "outgoing". This was a mistake! You must leave the savings box as zero - the savings box is only there for savings you absolutely have to make - e.g. if it is instead of your pension. Is it possible you made the same mistake?

FWIW I can strongly recommend FD. Similar deals to HSBC and good support over the phone during the application process. When I made this error, FD gave me hints about what I'd done wrong and invited me to "reconsider" my numbers and apply again.

And they made a very fast decision.

binkyb14

Thanks for the responses everyone.

I think I probably didn't answer strategically on the expenditure around savings and charity giving (which ultimately are a discretionary cost each month).

The bank contacted me on Saturday to say they were resubmitting to the underwriter suggesting we pay off our car loan from savings to increase the monthly affordability. On one level, I understand the thinking on this however doesn't really make wider financial sense. The car loan is 0% and we only borrowed the money as it didn't cost us anything! The savings are currently in an account paying 3%....

Still looks like rules is rules..! We await an answer from HSBC.

Thrugelmir

binkyb14 wrote: »

he car loan is 0% and we only borrowed the money as it didn't cost us anything!

No such thing as a free lunch. Interest is wrapped up in the price of the car. I recently bought a car and the dealer wouldn't offer a discount for cash. That was due to them wanting the kick back on the finance agreements to hit annual targets for arranging finance agreements.

hounslowfish

binkyb14 wrote: »

Thanks for the responses everyone.

I think I probably didn't answer strategically on the expenditure around savings and charity giving (which ultimately are a discretionary cost each month).

Yes - those two boxes are minefields. Hope you have cleared it up and the mortgage goes through, and if it fails you could do worse than try first direct. They are a different bank, from the perspective of applications, though owned by HSBC, and your HSBC attempt won't count against you.