HSBC Mortgage denied, fees to be paid!!

greig47

Hi All..

Having passed the initial affordability checks and jumped through all the hoops for an HSBC fixed rate mortgage, their underwriters have decided I can't afford the (much cheaper) mortgage.

I am contesting this at the moment, but if they stick to their decision, it looks like I will still have to pay all the high fees. This I am not happy about.

Anyone have any advice on what I can do?

I want the mortgage as a best result, but if they decline, then I don't want to pay the extortionate fee for nothing.

I am remortgaging and borrowing 3X my earnings at around 27% LTV. I have an excellent credit rating. I don't see why this product is unaffordable to me.

I wonder how many other readers have had fees charged for no product?

HiToAll

is it not an 'application fee', a fee for applying and not for anything guaranteed?

greig47

Do you think its ethical to tell me I passed an affordability check, charge me the highest fees out there and then deny me on grounds of affordability?

I know I can afford it, even at the stress test level. And come armageddon, they would do pretty well out of repossessing my home.

I am looking to see if this is a common occurrence and If so, what recourse I can take to refund fees improperly charged.

HiToAll

greig47 wrote: »

Do you think its ethical to tell me I passed an affordability check, charge me the highest fees out there and then deny me on grounds of affordability?

I know I can afford it, even at the stress test level. And come armageddon, they would do pretty well out of repossessing my home.

I am looking to see if this is a common occurrence and If so, what recourse I can take to refund fees improperly charged.

Yes I do think it is ethical that when they have more info about you they make a final decision.

Doesn't matter what you think about affordability, that is for the bank to decide. They are lending you a bit of money, they decide.

What did the paperwork say on the fees (you did read them did you not)?

Waldorf_Statler

did the underwriters specify the reasons for it to be unaffordable. they don't base it on multiples of salary. do you have any loan commitments or childcare payments or any such like that were not disclosed at the time of the AIP?

WillyWonga

HSBC are well renowned for being difficult. They say come to us for the best deals as we don't use brokers. Or they don't want to pay commission and the reasons for rejection will baffle the brokers.

greig47

Hi, thanks for the helpful replies..

I did have 2 interest free loans for furniture which were paid off in the month I applied.. I did not declare these (as they are paid off!) but perhaps I will need to show the evidence that the loans are no more. But then why would they not have queried this?

I have no childcare costs. My wife is a stay-at-home mum.

I am using the broker L&C.

I have passed on details of additional income as an attempt to pass their affordability criteria, so I haven't received full details of the underwriters' decision yet..

I suspect they will stick to their guns now, so I will post the details of the rejection if I ever get them.. I also suspect they will be vague enough to make an appeal on the affordability grounds difficult.

Many people seem to have had decisions reversed by going through the Financial Omnibudsman or through the press.

I am a strong advocate of the banking industry, and fully understand responsible lending criteria. A low interest loan also requires high fees to make the product viable to the lender, but I understand from a bit of digging around that I am far from being alone in being sucked in to pay the fees without being accepted for the product. Obviously, this is the banks decision. Morally, however, the risk of losing the fee should serve as a deterrent to time wasters, not used as a revenue generator by refusing the volumes of genuine low risk applicants.

It feels in my case that HSBC's eligibility calculator is not fit for purpose. If I really can't afford this product, then I should have been rejected at the initial stage.

Am I wrong?

HiToAll

The only way anyone could even hazard a guess at why you were denied is for you to post financial details here.

greig47

Update!

Thanks AFF8879.. Examining the small print and the breakdown of fees, it looks like I am only liable for an Arrangement Fee and Valuation Admin Fee totalling £284.. The booking fee of £1250 is indeed non refundable, but taken at time of offer. If no offer is made then I guess I don't have to pay it? Luckily the valuation of the property has not been instructed, so a £606 Valuation Fee is not due either. Other costs are Exit Fees, Deed release Fees, etc, from my original lender which I obviously won't need to pay either..

£284 is still a nasty sting for a money saving expert to take only to be told you can't afford to save £thousands over the 2 year fix!! but it's a bit more palatable than the £2200+ I signed up for..

I still want the mortgage.. So the question still stands, why do they say I can't afford it??

I've always ran my financial affairs conservatively (to a geek level!) fearing the worst with interest rate rises, etc. I wouldn't have bought the house if I thought I would lose it! I will look at my expenditure and see if the clue is in there..

Perhaps it is because I am the only money earner in the house and that is deemed too much a risk?

dunstonh

you think its ethical to tell me I passed an affordability check, charge me the highest fees out there and then deny me on grounds of affordability?

You created work. Who is going to pay for that work if it isnt you? This is why non-refundable fees exist.

Brokers tend to be wary of putting borderline cases with lenders with upfront/non-refundable fees. Although brokers tend to have direct lines to decision makers and can often put a case to them to get opinion before all the work is done.

I am using the broker L&C.

So, L&C recommended HSBC did they?
You may wish to raise this with them. Whilst a lender decision can be unexpected, HSBC are well known for cherry picking and being very tight on their criteria. If your scenario was not within their range, you would not expect a broker to consider them.

greig47

Hi Dunstonh..

Yes, I understand the work needs to be paid for.. It looks like the fees should only sum £284, which is palatable for the work done.. not £2200 as i originally thought!

I'm not that old a git, but it wasn't that long ago that mortgages were fees free!

As with many other things, the cost of this work is passed to the consumer in advance. Perhaps under the old model they wouldn't have risked doing the work for me in the first place..

I cannot blame L&C for punting an unsuitable product.. This is the one I wanted and specifically asked for.