HSBC Porting Mortgage Issue

achiles87

Hi

We are downsizing and thought that it would be relatively simple to port our existing 5 year fixed HSBC mortgage to the new property but HSBC advised today that their computer said I had failed the affordability check they do so they could not continue.

I pay at the moment £220 a month mortgage and I am 2 years into a 5 year fixed deal. The mortgage sum we are looking for is 48k and the value of our new property is around 117k. We will make approx 55k after fees from selling.

Since we remortgaged 2 years ago I have had to get another loan for a car and I have two balance transfers on credit cards that have 3 years left on the zero rate and I advised them of this and the amounts. They total approx £300 a month. The balance transfers will be paid off with the profits from the house sale.

The only questions I was asked was my salary which is 26k and how much my travel costs were per month. They didn’t ask for utility bill costs, TV packages, council tax etc.

The person I was dealing with was a “computer says no” person and couldn’t grasp the concept that I was already paying HSBC the mortgage amount so it was definitely affordable.

After asking to speak to a manager she agreed that they couldn’t see why it was refused and it would be passed to an underwriter after I provided a months worth of bank statements and a pay slip.

It makes no sense whatsoever that they say I can’t afford the payments on a new house which will be £200 less a month in bills but are happy to let me pay the same amount on a more expensive to run property.

As we need a decision quickly do you think I should be looking at other borrowers or stick with HSBC and hope that a human will agree that it doesn’t make any sense.

What’s the chances of this happening with another lender and what’s the affordability criteria?

Thanks

csgohan4

not enough info, total debts please, any missed payments CCJ e.t.c?


affordability isn't just what you can afford now but if interest rates are above 5% also taking into account your current debt/loans


HSBC are one of the strictest to get a mortgage and remortgage

Thrugelmir

Is your current mortgage interest only?

The only questions I was asked was my salary which is 26k and how much my travel costs were per month.

How many of you are there. As you refer to "we".

The person I was dealing with was a “computer says no” person and couldn’t grasp the concept that I was already paying HSBC the mortgage amount so it was definitely affordable.

Has no bearing on your new mortgage application. Times have changed since you first took out the original mortgage.

achiles87

Hi

We are on a repayment mortgage and have never missed any payments on mortgage or credit cards and have no CCJ’s.

Total credit card debt is approx 15k which would be cleared when the house is sold. Loan for car car is approx 7k with 4 years left.

There are two of us myself and my wife and have no dependents.

I know that things have changed but it doesn’t make sense to say I can’t afford 220 a month when I will have less outgoings and a lump sum in the bank, and the status quo is that the same monthly mortgage payment will be made regardless.

haras_nosirrah

Hi - I think you may have to change lender here. HSBC count debts even if you are paying them off with the move so they will still be factoring in your credit cards and loan

Other lenders if you are clearing will take them out of the affordability

I can't see this going through with hsbc unless the underwriter agrees it based on not making you a mortgage prisoner.

Is your wife working or is it just your income?

achiles87

Hi

Just my income. I also checked my credit rating this morning to check there wasn’t anything nasty hiding there but that is all good.

I have read whilst researching this that HSBC do appear to have tightened up an awful lot but that’s reassuring that other lenders might not take such a strict view. I have approached a broker in the meantime so hopefully they can help as well if the HSBC underwriter can’t help. Doesn’t say much for there policies that they think someone on a mortgage with more debt and higher monthly outgoings is less of a risk than someone with the opposite.

TrickyDicky101

If you move lender you will need to factor in the Early Repayment Charge payable when you redeem the HSBC mortgage.

kingstreet

Your new loan to value is 41%.

What would you estimate it to be on your present home?

if you don't meet current affordability you may need to make a case to the lender that allowing you to move and retain some of your borrowing will actually improve their risk as the loan to value will fall.

Although lenders are supposed to look favourably on borrowers trading down and not apply new affordability rules as harshly, often this doesn't happen despite the regulator "encouraging" them not to make mortgage prisoners.

If HSBC won't agree, I would consider making a complaint on the basis of the October 2012 FSA Transitional Arrangements (later adopted in the FCA's MMR in April 2014) which allow a lender to use its discretion in such cases where there is no increase in borrowing.

A recent case against Bank Of Scotland resulted in them refunding thousands in overpaid interest because they wouldn't allow a borrower to take a lower rate quoting affordability reasons, when doing so resulted in higher payments he was already making successfully.

https://www.telegraph.co.uk/personal-banking/mortgages/mortgage-prisoner-victory-bank-scotland-refunds-reader-30k/

The same transitional rules apply here.

achiles87

Early repayment fees no both products are a total of £1500, not ideal to pay his but not a deal breaker. I could invite theory pay off one of the products which would remove 15k off the mortgage and leave 33k to pay, this might relax the affordability rules.

LTV at the moment is 28% it’s going to be higher but again if I reduce the balance it might help.

The first contact with HSBC said in theory I could get up to 120k based on salary. Question I would have then is if I had no debt and a mortgage of say 80k would I be approved then?

Interesting about Bank of Scotland. That’s my feelings entirely