Tricked? into Fixed Rate 2 year deal

Tapmyhed

Quick one:
I re-mortgaged 4 months ago to capitalise on a 2 year fixed rate deal. At the time I also wanted to borrow extra for home improvements. Not needing the extension finance yet as, I had to align the builders, I was advised to take a home owner loan on top of my mortgage, in 3 months time. Preliminary acceptance was given to 60K, subject to an interview.


3 years ago I bought my home. The maximum amount I was offered for lending was 225K, I borrowed 185K. 3 years on my home is valued at 280K, hence re-mortgaging.


It needs to be extended as I can not afford to move, next prices up are 350K!


Back to the re-mortgage: I was accepted for re-mortgage, and last month another preliminary acceptance for the home owner loan was carried out, accepted to 80K, subject to formal interview on application.


All looking good.


I applied for 42K. Not accepted, reduced to 35K, still not accepted, 30K?....not accepted.


I signed on to a fixed rate 2 year deal with reasonable confidence of the home owner loan acceptance...given twice, albeit preliminary acceptance.


My extension is costing 56K, I wanted to borrow 42K.
I have no debts. No CCs. No loans...no nothing!! Adding the 42K to my outstanding debt comes in lower than the original 225K offered....


I wasn't given a reason for refusal...just the 'computer says no', so I chased this up with a complaint.
The response was I that I could not afford it!!!!!!!!!


So, to recap. I signed on to a 2 year fixed deal with reasonable confidence of the extra loan when all the builders, planning approval etc was lined up. Applied for it, and was refused. So now I am tied in to a 2 year deal with a 4K redemption!


Affordability is not in question!


I was offered 225K to purchase house, took 185K, wanted a further 42K and paid down my existing mortgage, and house value went up AND I've had 3 annual pay rises.


The nub of this is if I had less than reasonable confidence of the home owner application, I would not of taken out a 2yr fixed deal. As it is, my hands are tied, I can only fund part of the extension....not all of it. The house would be worth 315K on completion too. They even suggested that I delay the extension for 2 years! My reply....I can not stop my kids growing and they need the space now.


I feel like I've been led down a path.


Anyone care to guess which high street lender this is. I wouldn't want to tarnish their credibility before going to the onbudsman, which is my next step.


I want to break out of the agreement.


How do I stand?

Tapmyhed

The 2yr fixed deal was part of a plan too. After the extension was completed, I would wait until the 2 yr deal was up....which would be a year later....settle both loans into a single mortgage at the new house value.


Makes perfect sense to me.....but not to the computer....or the lender.

amnblog

Ask the Lender to investigate properly to establish what has happened here? There may be a simple explanation.

If you are not happy with their response you have recourse to the financial ombudsman.

tomtontom

You were never guaranteed the loan. Now they have fully assessed you on affordability they have decided it would not be a sound financial decision to lend you the money. You took a risk that did not pay off. I see no grounds for complaint.

Tapmyhed

I appreciate I was never guaranteed the loan, but on the basis of 2 things did I proceed: pelimary acceptance with an enthusiastic advisor and that multiple credit reference checks would damage my application.


The re-mortgage was without a credit check, hence the splitting of the application into 2 distinct applications, the second involving a full on credit check....which I passed with flying colours.


I also have 30K in savings.


In keeping with the ability to pay 6 months mortgage incase of emergency, and personally extending this to 1 year, I did not want to use all the savings on the extension. I need personal security.


I just do not think it was gentlemanly in how I have been handled as a full re-mortgage with the extension taken into account was possible with a wealth of choices from many lenders. I decided to stay with HSBC on the grounds that I liked the company, they were easy to talk to, and original loan application 3 years ago was handled extremely well. I know I not over extending myself, and am also protecting HSBCs investment in me (if it is an investment of sorts?) by adding value to the property and reducing the risk.


I think I will complain to the ombudsman as I would not of continued with HSBC had the preliminary acceptance had been more honest.....after all, they already know everything about me!


I want to break out of this agreement and get on with my affordable life.

TrickyDicky101

Tapmyhed wrote: »

I think I will complain to the ombudsman as I would not of continued with HSBC had the preliminary acceptance had been more honest.....after all, they already know everything about me!


I want to break out of this agreement and get on with my affordable life.

You need to exhaust the official complaints route with the lender first (otherwise the FOS will just refer you back to them). Call the lender and make sure you state you wish to make a formal complaint and ask how you do so.

You never know, it might get them to reconsider and offer up a solution and if not, you can then escalate to the FOS.

GoldenShadow

They tightened up on affordability last year apparently. You mention kids, did you have kids three years ago?

Let_Us_See

Tapmyhed wrote: »

I signed on to a fixed rate 2 year deal with reasonable confidence of the home owner loan acceptance...given twice, albeit preliminary acceptance.

Unfortunately, you have made the simple mistake of assuming your second loan will be considered affordable and granted, your lender believes otherwise and has declined to lend.

What happened three years ago is irrelevant, and even if your new fixed mortgage and proposed loan was affordable at the time of re-mortgage, is doesn't necessary mean it will be at a later date. If HSBC stick to their guns, and given the early redemption charge of a fixed rate, then your best option may be to consider second charge borrowing.

Tapmyhed

In the 3 years, nothing has changed, other than earnings....which has gone up. Had 3 kids then, have 3 kids now.
I appreciate the replies, so thanks for taking the time to make them.


I have already made a complaint, but that was to do with not knowing why the answer was no. I'll make one more formal complaint regarding the decision before going external.


I do have one more choice, and that is defer until early next year when the redemption fees reduce to 2K then just re-mortgage and take the hit. Seems the lender then only gets the 2K out of me and not the forecast tens of K a loyal customer would return to them....still they know best!


Thanks again.

Tapmyhed

Oh....it was affordable! The original re-mortgage, which was a lifetime tracker, was costing about 1K/mnth. Re-mortgage reduced this to 700. The home owner loan would have put this back up by 250, so over all, it would have been 50 less than original. So you can see why I think this isn't right. It isn't worse at all.
I'm still mid 20% earnings (net) to loan ratio, with no other debts at all.
You cant say that is not affordable!
Anyway, it is what it is I guess and I will move forward one way or another.

Thrugelmir

Tapmyhed wrote: »

I think I will complain to the ombudsman as I would not of continued with HSBC had the preliminary acceptance had been more honest.....after all, they already know everything about me!

You've no grounds for complaint. So you'll be wasting your time. The simple fact is that you don't meet the lenders criteria. Lenders criteria can change constantly it's not set in stone. Lenders after all are businesses. While you might feel better after complaining I doubt it will improve your relationship with the bank. As relationships are a two way matter.