HSBC rejected - subjective

Palmtree7

I applied for a mortgage with HSBC via my broker 5 weeks ago. 

Loan: £215k
Deposit: £80k (coming from equity in current home)
Term: 22 years
5 years fixed rate 

The application is in my name only but I am married and have a young baby. Husband is self-employed and SA302s show nil due to tax losses but he made accounting profits. Broker said it was better to apply solely to show that husband is not a dependant. 

Salary: c£90k
Annual bonus: £7,500

i have no credit card debt but loans totalling £1240 per month. 

Broker advised that first underwriter passed me for affordability and credit check passes. Valuation fine too. I’m on mat leave now but returning to work 1 July 2023 full time and I provided detailed letter from employer (big 4 firm) along with mat leave payslips and bonus payslips for past two years. Also sent pre mat leave payslips and bank statements. Will not have any childcare costs. 

Broker expected it to take 2 weeks to offer and after 5 weeks received notification that declined due to affordability. Broker says I passed lending criteria and is stumped that an underwriter approved affordability early on in the process but the end underwriter rejected based on a subjective reason, quoting future potential interest rate increases. Broker stated that first pass at affordability was already stress tested.

We are now 6 weeks from completion and no mortgage. Appeal has been submitted and broker stated that even the hsbc mortgage relationship manager was shocked at the decision. Apparently she has asked underwriter to justify decision 3 times since Monday and underwriter not responding.

Another application is now in with NatWest and valuation booked (and estate agent raging!). Now I’m terrified NatWest will decline also. I’ve a great credit history, no late payments, etc.

if NatWest decline too there’s no way I can try a third lender as estate agent will go even more ballistic! 

Any insight into what’s gone wrong? Broker keeps reiterating that it makes no sense, is highly unusual, is more than a stress test and is a subjective decision based on a “what if”. I don’t hold out much hope for positive outcome of appeal if underwriter isn’t even responding internally!

Current mortgage is with NatWest. 

K_S

@palmtree7 The numbers seem comfortable enough for borrowing 215k. 

Based on the limited info in your post (there might be other relevant info in the background), if I had to pick a potential issue, it might be the plausibility of the reason that you've given for no childcare costs. To broaden it out a bit, combining that with a sole income mortgage in a high income job. And potentially anything else to do with your husband's income/business (even though he isn't on the mortgage).

Any reason that you limited the term to 22 years? HSBC will consider going all the way to 80 years of age for desk based roles. In these kind of cases sometimes it's best to stretch the term to add some padding to affordability. You can always overpay if you wish to shorten the term but having a decent amount of flex in affordability sometimes helps with any subjective decisions the underwriter needs to make.

I think it's just a bit of bad luck, you probably just came up against the 'wrong' underwriter and should be fine with NatWest.

I hope your HSBC decision is overturned or your NatWest offer comes through, good luck!

Palmtree7 said:

I applied for a mortgage with HSBC via my broker 5 weeks ago. 

Loan: £215k
Deposit: £80k (coming from equity in current home)
Term: 22 years
5 years fixed rate 

The application is in my name only but I am married and have a young baby. Husband is self-employed and SA302s show nil due to tax losses but he made accounting profits. Broker said it was better to apply solely to show that husband is not a dependant. 

Salary: c£90k
Annual bonus: £7,500

i have no credit card debt but loans totalling £1240 per month. 

Broker advised that first underwriter passed me for affordability and credit check passes. Valuation fine too. I’m on mat leave now but returning to work 1 July 2023 full time and I provided detailed letter from employer (big 4 firm) along with mat leave payslips and bonus payslips for past two years. Also sent pre mat leave payslips and bank statements. Will not have any childcare costs. 

Broker expected it to take 2 weeks to offer and after 5 weeks received notification that declined due to affordability. Broker says I passed lending criteria and is stumped that an underwriter approved affordability early on in the process but the end underwriter rejected based on a subjective reason, quoting future potential interest rate increases. Broker stated that first pass at affordability was already stress tested.

We are now 6 weeks from completion and no mortgage. Appeal has been submitted and broker stated that even the hsbc mortgage relationship manager was shocked at the decision. Apparently she has asked underwriter to justify decision 3 times since Monday and underwriter not responding.

Another application is now in with NatWest and valuation booked (and estate agent raging!). Now I’m terrified NatWest will decline also. I’ve a great credit history, no late payments, etc.

if NatWest decline too there’s no way I can try a third lender as estate agent will go even more ballistic! 

Any insight into what’s gone wrong? Broker keeps reiterating that it makes no sense, is highly unusual, is more than a stress test and is a subjective decision based on a “what if”. I don’t hold out much hope for positive outcome of appeal if underwriter isn’t even responding internally!

Current mortgage is with NatWest.

Palmtree7

K_S said:

@palmtree7 The numbers seem comfortable enough for borrowing 215k. 

Based on the limited info in your post (there might be other relevant info in the background), if I had to pick a potential issue, it might be the plausibility of the reason that you've given for no childcare costs. To broaden it out a bit, combining that with a sole income mortgage in a high income job. And potentially anything else to do with your husband's income/business (even though he isn't on the mortgage).

Any reason that you limited the term to 22 years? HSBC will consider going all the way to 80 years of age for desk based roles. In these kind of cases sometimes it's best to stretch the term to add some padding to affordability. You can always overpay if you wish to shorten the term but having a decent amount of flex in affordability sometimes helps with any subjective decisions the underwriter needs to make.

I think it's just a bit of bad luck, you probably just came up against the 'wrong' underwriter and should be fine with NatWest.

I hope your HSBC decision is overturned or your NatWest offer comes through, good luck!

Palmtree7 said:

I applied for a mortgage with HSBC via my broker 5 weeks ago. 

Loan: £215k
Deposit: £80k (coming from equity in current home)
Term: 22 years
5 years fixed rate 

The application is in my name only but I am married and have a young baby. Husband is self-employed and SA302s show nil due to tax losses but he made accounting profits. Broker said it was better to apply solely to show that husband is not a dependant. 

Salary: c£90k
Annual bonus: £7,500

i have no credit card debt but loans totalling £1240 per month. 

Broker advised that first underwriter passed me for affordability and credit check passes. Valuation fine too. I’m on mat leave now but returning to work 1 July 2023 full time and I provided detailed letter from employer (big 4 firm) along with mat leave payslips and bonus payslips for past two years. Also sent pre mat leave payslips and bank statements. Will not have any childcare costs. 

Broker expected it to take 2 weeks to offer and after 5 weeks received notification that declined due to affordability. Broker says I passed lending criteria and is stumped that an underwriter approved affordability early on in the process but the end underwriter rejected based on a subjective reason, quoting future potential interest rate increases. Broker stated that first pass at affordability was already stress tested.

We are now 6 weeks from completion and no mortgage. Appeal has been submitted and broker stated that even the hsbc mortgage relationship manager was shocked at the decision. Apparently she has asked underwriter to justify decision 3 times since Monday and underwriter not responding.

Another application is now in with NatWest and valuation booked (and estate agent raging!). Now I’m terrified NatWest will decline also. I’ve a great credit history, no late payments, etc.

if NatWest decline too there’s no way I can try a third lender as estate agent will go even more ballistic! 

Any insight into what’s gone wrong? Broker keeps reiterating that it makes no sense, is highly unusual, is more than a stress test and is a subjective decision based on a “what if”. I don’t hold out much hope for positive outcome of appeal if underwriter isn’t even responding internally!

Current mortgage is with NatWest.

Thank you for your reply. I picked 22 year term because I was carrying on with remaining years from my current mortgage. I never really considered increasing the term but overpaying instead but I’ve suggested this to my broker to see if it will help. I think NatWest are reviewing docs today and valuation is booked for today.

What’s baffling with HSBC is that they didn’t offer an alternative. I had thought if I was tight on affordability then they might have offered a reduced sum or longer term but it was simply “no” at the very end. As I may have said above, even the BRM is shocked by the outcome!

K_S

@palmtree7 If HSBC took 5 weeks to reach a decision it probably got escalated, went through a few teams before getting declined on a grounds of plausibility or suspected misinformation (I'm not saying that you misrepresented anything, just speculating on the reason).

Given maternity is a protected characteristic, it's unlikely that they'd have taken the decision without a good bit of due diligence.

At the end of the day, there's unlikely to be a lot between a NatWest and HSBC rate and even if it seems significant now, you won't remember what it is in a few years.

Good luck!

Palmtree7 said:

K_S said:

@palmtree7 The numbers seem comfortable enough for borrowing 215k. 

Based on the limited info in your post (there might be other relevant info in the background), if I had to pick a potential issue, it might be the plausibility of the reason that you've given for no childcare costs. To broaden it out a bit, combining that with a sole income mortgage in a high income job. And potentially anything else to do with your husband's income/business (even though he isn't on the mortgage).

Any reason that you limited the term to 22 years? HSBC will consider going all the way to 80 years of age for desk based roles. In these kind of cases sometimes it's best to stretch the term to add some padding to affordability. You can always overpay if you wish to shorten the term but having a decent amount of flex in affordability sometimes helps with any subjective decisions the underwriter needs to make.

I think it's just a bit of bad luck, you probably just came up against the 'wrong' underwriter and should be fine with NatWest.

I hope your HSBC decision is overturned or your NatWest offer comes through, good luck!

Palmtree7 said:

I applied for a mortgage with HSBC via my broker 5 weeks ago. 

Loan: £215k
Deposit: £80k (coming from equity in current home)
Term: 22 years
5 years fixed rate 

The application is in my name only but I am married and have a young baby. Husband is self-employed and SA302s show nil due to tax losses but he made accounting profits. Broker said it was better to apply solely to show that husband is not a dependant. 

Salary: c£90k
Annual bonus: £7,500

i have no credit card debt but loans totalling £1240 per month. 

Broker advised that first underwriter passed me for affordability and credit check passes. Valuation fine too. I’m on mat leave now but returning to work 1 July 2023 full time and I provided detailed letter from employer (big 4 firm) along with mat leave payslips and bonus payslips for past two years. Also sent pre mat leave payslips and bank statements. Will not have any childcare costs. 

Broker expected it to take 2 weeks to offer and after 5 weeks received notification that declined due to affordability. Broker says I passed lending criteria and is stumped that an underwriter approved affordability early on in the process but the end underwriter rejected based on a subjective reason, quoting future potential interest rate increases. Broker stated that first pass at affordability was already stress tested.

We are now 6 weeks from completion and no mortgage. Appeal has been submitted and broker stated that even the hsbc mortgage relationship manager was shocked at the decision. Apparently she has asked underwriter to justify decision 3 times since Monday and underwriter not responding.

Another application is now in with NatWest and valuation booked (and estate agent raging!). Now I’m terrified NatWest will decline also. I’ve a great credit history, no late payments, etc.

if NatWest decline too there’s no way I can try a third lender as estate agent will go even more ballistic! 

Any insight into what’s gone wrong? Broker keeps reiterating that it makes no sense, is highly unusual, is more than a stress test and is a subjective decision based on a “what if”. I don’t hold out much hope for positive outcome of appeal if underwriter isn’t even responding internally!

Current mortgage is with NatWest.

Thank you for your reply. I picked 22 year term because I was carrying on with remaining years from my current mortgage. I never really considered increasing the term but overpaying instead but I’ve suggested this to my broker to see if it will help. I think NatWest are reviewing docs today and valuation is booked for today.

What’s baffling with HSBC is that they didn’t offer an alternative. I had thought if I was tight on affordability then they might have offered a reduced sum or longer term but it was simply “no” at the very end. As I may have said above, even the BRM is shocked by the outcome!

simon_or

Might be that the bank doesn't believe that you won't have childcare costs for an infant once you go back to work.

Palmtree7

simon_or said:

Might be that the bank doesn't believe that you won't have childcare costs for an infant once you go back to work.

Possibly but they specifically said in their rejection note that it’s due to affordability in the event of future rate increases. However I’m told that the affordability test that I passed was already stress tested, hence it doesn’t make a lot of sense. 

Palmtree7

Could the pulling of HSBC new mortgages be the reason? Would “in progress” applications be affected by the temporary withdrawal? 

K_S

@palmtree7 The temporary withdrawal of products only refers to new applications.

Any full application that has been submitted by today evening, the applied-for product/rate is secured subject to underwriting.

Applications that went in today and will go in from the 12th are probably looking at a massive backlog to be cleared before they get picked up and processed.

Palmtree7 said:

Could the pulling of HSBC new mortgages be the reason? Would “in progress” applications be affected by the temporary withdrawal? 

KSS1991

We are with HSBC too - mortgage offer received last month, due to complete end of this month. Just spoke to the broker who confirmed the approved applications are not affected by HSBC withdrawing new deals. God this is exactly the type of thing that makes you panic and just adds extra stress to already stressful process!

Palmtree7

I heard from my broker today that the manager of the HSBC underwriter has now picked up my case again and is re-reviewing …

Natwest are also almost near the end of the application so should hear the outcome of that either today or Monday. 

I feel soooo sick. 

KSS1991

Palmtree7 said:

I heard from my broker today that the manager of the HSBC underwriter has now picked up my case again and is re-reviewing …

Natwest are also almost near the end of the application so should hear the outcome of that either today or Monday. 

I feel soooo sick. 

fingers crossed for you!