HSBC remortgage application declined

Lrimas

Hi all,

At this point I'm not asking for advice, I am merely writing down my experience with our HSBC remortgage application for some support and in case it helps someone in future.

Our application was rejected yesterday as HSBC decided it would not be affordable. This came as a surprise as I worked out that we will be able to afford up to at least a 15% interest rate - more than double the eu regulations. This is without cutting down on our expenses, simply by saving less.

After going through our financial information I realised that the underwriter made several mistakes:
1) They changed £200 that I am investing in company stocks to a "student loan payment". I understand why as the name is misleading, but I do not have a student loan and this payment stops in September.
2) They excluded my car allowance from my salary and reduced my salary by £5k per year. I think this is because my company forgot to pay it one month (so it was excluded from one payslip) and in the next month this was corrected (I received double the amount). It was correct in my final payslip.
3) My partner incorrectly added his car loan payment to "contractural expenses" instead of loans. The underwriter picked this up and added it to loans, but did not remove it from the contractual expenses.

With all of these mistakes it looks as if we are spending £700 more per month and earning £425 less. Based on this incorrect information we can only afford an increase to an interest rate of 9%. Even this should be affordable so I wonder if they made any more mistakes.

I'm going to go over the financial information again tonight to see if anything else is wrong. Then I'll phone them tomorrow to see if they will reconsider based on this.

I will let you all know how it goes tomorrow.

Lrimas

An update: my partner managed to get through to the underwriter and they have agreed to reopen our case :beer:

He managed to explain the errors on his financial details but not on mine.

I was less sucesfull and did not manage to convince the HSBC man to put me through to the underwriter. Apparently they are going to re-evaluate our case and give us an answer tomorrow. I tried to explain that it would be better if they re-evaluate the case with the correct details but he just kept on repeating that they will phone me tomorrow.

Here is hoping for a "yes" tomorrow, otherwise I will ask them to correct my details as well.

Kitten868

Good luck!

Lrimas

Mystery solved!

The nice lady at HSBC called me back and made note of the mistakes on my financial information. She still didn't seem convinced that it would be enough which confused me a little bit.

Then she asked the question: "The £2100 you have added under savings and investments, is it contractual?"

I explained that it was not contractual, but that it is the minimum we save/invest a month in regular savings / isa / vct / etc.

I would be interested to know if the question specifies "contractual" and if we got it wrong. Does anyone who recently applied at HSBC know?

Lesson learnt: Do not add your savings/investments under savings/investments because it might look like expenses instead of savings.

We will get a new answer in a few days time. I feel much more confident now that I know what went wrong.

SuperHan

I went through an application with a friend yesterday, and although I don't recall seeing the word 'contractual' for the savings and investments part, I do remember that she didn't put anything in there, as there was an implication if you were just moving money to somewhere accessible, it didn't count.


That said, I was only really observing the process, so didn't read a lot of the detail, but that does also instinctively make sense.

Lrimas

Thanks Superhan,

I have to admit that it never even occured to me that savings/investments could be anything but voluntary. Even my pension contributions can be stopped if I choose to. I assumed the question was there to ensure that your expenses match your income (to ensure that people write down what they really spend instead of what they would like to spend).

I guess that is how we learn

Edit: ok, I can still not think of any savings/investments that are not voluntary. Can anyone shed some light?

fewcloudy

This is why I am always happy to let my mortgage broker deal with such things, he's worth his weight in gold. He fills out these forms for a living FGS! I've never had to phone a bank about my mortgage/remortgage applications.


fc

Lrimas

Yeah, I regret not going via a broker. I thought: "what could possibly go wrong?"

Apparently rather a lot...

Kaz030

Newbie here and i wish you good luck.

To add to your thread, does anyone know if the EU Affordability Test will still be applied as stringently, now we are to leave the EU? Surely banks don't have to adhere to it, or at least "won't" have to once we have actually left the EU?

csgohan4

I understand that HSBC are direct only and do not deal with brokers. Anyone care to disagree?

Lrimas

Thanks Kaz.

To answer your question: no, we are still part of the EU and are still bound by their rules. Leaving them can take years and even after that it might take years for rule changes to go through. In other words, don't hold your breath.

That said, Martin Lewis is currently trying to get the banks to drop affordability for remortgaging. That might happen sooner. :money:

csgohan4, I think you are correct. And I really wanted to be with HSBC as they tend to have the lowest deals consistently. So I don't have to feel too bad for firing my broker this year