Changing mortgage offer between exchange & completion

Iwonder2

Hi there,
I would appreciate a sense check on my unfortunate conclusion please
FTB - completion on 19th Feb.
I have had to redo my mortgage twice with HSBC - once originally and a second time due to a price reduction changing the LTV (220k to 205k). The mortgages went through immediately with no underwriting.
First offer was in November, second end of Jan 21 - for some reason these 2 offers have created 3 hard credit checks - 2 in Nov & 1 in Jan.
There was a mad rush to get everything sorted and signed when I had to redo the mortgage app and I regret taking out a 5 year 85% at 2.94% mortgage as opposed to an 80% at 2.04% 2 year.
I know the price difference over 5 years in interest repayments (and therefore also reduction in capital repayments) is huge potentially reaching a good 10k if you consider the ability to remortgage at a lower LTV with the 2yr option.
HSBC have advised that changing the mortgage again so late on could lead to a rejection simply based on hard credit checks being present close to one another. Despite the turnover of the previous change being done in 3 days they have said there is no promise of the same and to consider potential need for underwriters etc meaning there may not be enough time if any issues arose.
Given my solicitor wants 5 days clearance for drawdown this only leaves this week to achieve this.
I have a high credit score on experian 900+ (expected to rise by 65 once these checks are gone - I know this score is somewhat fictitious and the lender use their own algorithm etc. ) The high number makes me feel the risk of rejection is low but HSBC seem adamant to stress the risk.
I understand should it reject I do not have time to do anything and would therefore not be able to complete and would owe substantial damages + deposit to the seller which would override any savings and be disastrous as I really like the place I am buying and acknowledge I have knocked 15k off the price despite the mortgage error.
I have grudgingly come to the conclusion that my best bet is likely to continue with my current offer and look to do some overpayments and then pay the ERC of 3-5k after 3-2 years.

If anyone has some pearls of wisdom to throw in please do as I've been cogitating over the above and would appreciate some input from others.

Thank you!

[Deleted User]

Iwonder2 said:

Hi there,
I would appreciate a sense check on my unfortunate conclusion please
FTB - completion on 19th Feb.
I have had to redo my mortgage twice with HSBC - once originally and a second time due to a price reduction changing the LTV (220k to 205k). The mortgages went through immediately with no underwriting.
First offer was in November, second end of Jan 21 - for some reason these 2 offers have created 3 hard credit checks - 2 in Nov & 1 in Jan.
There was a mad rush to get everything sorted and signed when I had to redo the mortgage app and I regret taking out a 5 year 85% at 2.94% mortgage as opposed to an 80% at 2.04% 2 year.
I know the price difference over 5 years in interest repayments (and therefore also reduction in capital repayments) is huge potentially reaching a good 10k if you consider the ability to remortgage at a lower LTV with the 2yr option.
HSBC have advised that changing the mortgage again so late on could lead to a rejection simply based on hard credit checks being present close to one another. Despite the turnover of the previous change being done in 3 days they have said there is no promise of the same and to consider potential need for underwriters etc meaning there may not be enough time if any issues arose.
Given my solicitor wants 5 days clearance for drawdown this only leaves this week to achieve this.
I have a high credit score on experian 900+ (expected to rise by 65 once these checks are gone - I know this score is somewhat fictitious and the lender use their own algorithm etc. ) The high number makes me feel the risk of rejection is low but HSBC seem adamant to stress the risk.
I understand should it reject I do not have time to do anything and would therefore not be able to complete and would owe substantial damages + deposit to the seller which would override any savings and be disastrous as I really like the place I am buying and acknowledge I have knocked 15k off the price despite the mortgage error.
I have grudgingly come to the conclusion that my best bet is likely to continue with my current offer and look to do some overpayments and then pay the ERC of 3-5k after 3-2 years.

If anyone has some pearls of wisdom to throw in please do as I've been cogitating over the above and would appreciate some input from others.

Thank you!

If HSBC has already said a 3rd application is likely to be rejected then I think you’re crackers even considering it. 

The Experian credit score isn’t somewhat fictitious, it’s completely pointless, and will not feature in HSBC’s decision in whether to grant you a mortgage or it.

MaryNB

Iwonder2 said:

I have a high credit score on experian 900+ (expected to rise by 65 once these checks are gone - I know this score is somewhat fictitious and the lender use their own algorithm etc. ) The high number makes me feel the risk of rejection is low but HSBC seem adamant to stress the risk.

You were right the first time, it's fictitious. You know it's fictitious and HSBC have told you that you are a risk of rejection so the fact the number is high should not influence your decision in any way. HSBC don't see it, they see the hard searches. My friend had a score in the high 900s and was recently turned down for a loan that he could more than afford because his bank didn't like giving him a loan after he just remortgaged. Ignore the score!!! 

Trying to convince yourself there isn't s risk (despite your own lender saying otherwise) is going to put you in the terrible position of failing to complete.

Sistergold

Why do you really want to do this? The money you want to save is not the end of the world in the grand scheme of things as you can overpay anyway and reduce the interest you pay overall! Don’t mess up this whole arrangement as failing to complete due to rejected mortgage will cost you way more in money and stress than whatever money you think you want to save! That’s why they say “don’t shop around for price after buying a no return no exchange dress!” You can not start looking for different mortgage after exchange and setting completion date it’s the craziest thing one can ever do! But if you have not yet exchanged if you want to go against good advice from hsbc then at least all you will lose is the house and your solicitors fees I guess if the mortgage should fail as predicted!“The devil will be able to do you a crazy one if you do this kind of thing! You are lucky hsbc gave you very good advice! 

Personally I never take a fix of any kind and would never take a 5 year fix! I know the reasons people take fixes but I don’t mind risking an increase in rates but at the end of the day the rate increase does not usually just sky rocket from nowhere! 

5 years will be over in no time well in 5 years and you will at least be secure in your home! Just overpay if you choose to upto the maximum allowed or just forget about it and take it as a lesson for next time you review your mortgage. 

Iwonder2

Thank you @Lover_of_Lycra , @MaryNB & @Sistergold - appreciate that you all came to the same conclusion as me but with no hesitation as you have the further step back and a view of the bigger picture so thanks .

@Sistergold Yes I think my irritation is just around the excess in interest and I agree regarding the 5 yr, I had intended to go for 2yr and then got concerned about remortgaging in a climate where prices were perhaps more likely to be in negative equity. However, I would be unlikely to have gone for this if stress levels had been a little lower as I began with the intention of taking a 2yr. I considered the tracker but interestingly it was the same rate as 85% but I can see the huge advantage of no exit fee.
Thank you for your response - to clarify there was extreme time pressure to redo the mortgage and exchange so everything was rather flustered. It's nice to read your reply and put it all in perspective.

Either way, everything else has gone smoothly and I definitely got a great deal and am really looking forward to moving in so thank 

Iwonder2

Lover_of_lycra

If HSBC has already said a 3rd application is likely to be rejected then I think you’re crackers even considering it. 

The Experian credit score isn’t somewhat fictitious, it’s completely pointless, and will not feature in HSBC’s decision in whether to grant you a mortgage or it.

Just for anyone else reading - to clarify HSBC do not necessarily believe it will reject as my case was so simple and shot through twice - they have to say they cannot attribute a % of detriment that the previous credit checks have had on the overall amalgamated internal credit score they require for passing the application.
The existence of the checks themselves is less concerning due to them having visibility of it being from them and knowledge they accepted it.
If I weren't between exchange/completion I therefore wouldn't feel too awful chancing it.

Nile_E_Coyote

Iwonder2 said:

Thank you @Lover_of_Lycra , @MaryNB & @Sistergold - appreciate that you all came to the same conclusion as me but with no hesitation as you have the further step back and a view of the bigger picture so thanks .

@Sistergold Yes I think my irritation is just around the excess in interest and I agree regarding the 5 yr, I had intended to go for 2yr and then got concerned about remortgaging in a climate where prices were perhaps more likely to be in negative equity. However, I would be unlikely to have gone for this if stress levels had been a little lower as I began with the intention of taking a 2yr. I considered the tracker but interestingly it was the same rate as 85% but I can see the huge advantage of no exit fee.
Thank you for your response - to clarify there was extreme time pressure to redo the mortgage and exchange so everything was rather flustered. It's nice to read your reply and put it all in perspective.

Either way, everything else has gone smoothly and I definitely got a great deal and am really looking forward to moving in so thank 

Can you not just overpay and knock the interest off that way? Certainly less risky than going through it again 

greatcrested

Go for it! What's the worst that can happen?

OK, the existing mortgage would be withdrawn and the new application could be rejected, but you'd still have your new home as you've Exchanged so have no option but to Complete. Just a question of finding the cash elsewhere.

Oh! Hmmm. Would that be a problem?

Iwonder2

Nile_E_Coyote said:

Can you not just overpay and knock the interest off that way? Certainly less risky than going through it again 

I guess it depends how you look at it - this is how I see it: you can't really diminish the level of interest within the product term of 5 years - both reducing the overall mortgage term or overpaying have negligible influences on the immediate 5 year fix interest amount owed - the rate seems to dictate this more than any personal payment changes you can try to implement aka you'll never beat a higher rate even with overpayments vs a savvier rate initially.

If you zoom out and consider it over the length of the full mortgage term then yes you shorten the full course of the mortgage by overpaying thereby reducing total interest paid. I'm not too sure this kind of big picture thinking is as helpful if it's a first home as you'll likely end up with a larger mortgage down the line and a change in LTV/term/potential additional borrowing but appreciate it can make a difference all the same.

I would be interested to know if you see it differently. I definitely understand all the subtleties a lot more now so some good long term learnings!

Thrugelmir

In 2 years time interest rates may have risen. Then what? All this fluster would have achieved nothing. 

Iwonder2

Thrugelmir said:

In 2 years time interest rates may have risen. Then what? All this fluster would have achieved nothing. 

Although this does not negate the original cost between the two - I fully appreciate this may happen and I look forward to finding out!
I am also glad everything else has gone very well and costs have been low so am thankful overall given the situations that seem to occur on here!