Mortgage declined 1 month after being approved

alok

Hi Guys,

I am absolutely crushed.
I went to see a Mortgage advisor in the HSBC branch who I do business banking with back in Feb to see if I could get a mortgage and if I could, how much would I be able to borrow. I went with my friend to this meeting. The adviser did his checks and ran the figures through the system and told me I could borrow X amount. I was given a mortgage in principle. I told him my friend would be helping me with little bit of the deposit. The advisor told me they'd need a letter saying its a gift and NOT a loan signed by my friend.

We then found a property and had our offer accepted. I informed the Mortgage advisor and went with my wife who is the join applicant for a 2nd meeting which was the actual application. Everything went well and we then submitted all of our documents including the Gift Letter from the friend.

I instructed the solicitors back in early march who then drilled me with the gift letter queries. They wanted to see how my friend acquired that deposit so we had to submit his 6 months statements and other supporting documents to prove some cash deposits in his account.

Then my mortgage was approved in early April, I got a letter stating the same from HSBC and they said they will now instruct their own team of surveyors for a valuation report and survey. I paid more to their surveyors for a thorough report. Again it all came back well and I was told everything was done. Even on the finance page of the conveyancing solicitors, it shows Receipt of Mortgage advance from HSBC.

Yesterday I finally got the contract and TR1 letter from the conveyancing solicitors which I signed and posted back. And then today I got an email from the solicitors saying the LENDERS (HSBC) are not approving the mortgage because they don't accept gift letter from a family friend!

I have paid for the solicitors fees, registry fees etc, surveys and everything. Given my notice to my current landlord and he has already found a new tenant who's moving in when I move out end of June with my family. I am not sure what to do now as I have 3 kids and not enough time to find a new property again.

Am I missing something here? Am I wrong in any of this or have I been f**ked by HSBC at the last min?

PLEASE HELP! TIA

Thrugelmir

alok wrote: »

The advisor told me they'd need a letter saying its a gift and NOT a loan signed by my friend.

Seems as if you were incorrectly advised. Speak to the branch ASAP. How much is your "friend" contributing as a gift?

alok

Yeah I only got an email at 5 so I couldn't even get in touch with anyone. My friend is contributing £20k out of the £40k deposit. My concern is, even if I was incorrectly advised, how did the solicitors not pick this up 2 months ago and how did HSBC still approve the mortgage after receiving this letter 2 months aga?

Mortgage_Adviser

http://www.intermediaries.hsbc.co.uk/script/components/templates/lendingCriteria-Tab-Data.html


The above does not mention anywhere that the deposit can come from an unrelated person. It appeasr ypour adviser from the bank got it wrong.


If I was you I would get in touch with a good independant mortgage broker/adviser and start it all from scratch.

There would not be many lenders that would accept a deposit coming from a non relative so you need a speacialist help here.


If this is against HSBC procedures they will not change thir mind.


After your new applcation with a new lender is (hopefully) succesful and the purchase completes you will know at that point what financial losses you have suffered as a result of the bad advice from HSBC adviser.
You can then formally make a copmplaint to HSBC detailing your financial losses (such as additional legal fees, valuation fees etc.) and request those to be compensated.


In addition I would ask the compensation for distress and time wasted on them.

Medihv

I’ve heard of something very similar recently
.
I guess that “friends” don’t tend to just give people 20k, so they assume it’s a loan or money that you need to pay back. I know that legal advisors ask for forms to be signed conforming that it is a gift and that you do not need to pay it back, but not many mortgage companies are comfortable with this. As a lot of people sign these forms and then still pay back the “friend”

I’m not suggesting that you are doing this, but it is something that is happening a fair bit at the moment, what with higher and higher house prices.

I hope that the situation is resolved soon

poppy10_2

alok wrote: »

I told him my friend would be helping me with little bit of the deposit.

alok wrote: »

My friend is contributing £20k out of the £40k deposit.

If this is your level of honesty then perhaps little wonder the bank didn't want to proceed

alok

Hi guys,

Thank you for your responses. Thank you for the overtly judgmental people too. Very quick to jump on the gun!

Me and my Friend have known each other since we were kids and I have helped him on numerous occasions with money and so has he. I had actually not even taken the money from him for the deposit. I had paid for his sisters university fees and her halls charges (international student) couple of years ago. He had just paid that money back to me as he knew I was going to need it to buy a house soon. Because there was no legal agreement between us at that time, that big lump sum deposit in my account had to be justified to the bank, hence I was advised by my mortgage advisor to make it look like a gift and just get it signed from my friend that it is a gift. Which I did. I had £63k saved and I was going to use only £40k for the deposit and spend the rest on renovation of the house at some point later on in the year.

Any way, the update is, I spoke to length's with the mortgage center and got this resolved after our solicitors and the mortgage advisor discussed this. The application was eventually accepted and we are exchanging contracts next week.

Thank you for taking the time to reply, I really appreciate it.

Kind regards