This is more for MSE... But please beware of HSBC and funny rules about CCs

[Rainbowhairdontcare]

On the advice of my mortgage broker that doesn't work with HSBC, he suggested I talked to them as I've been doing my banking with them for 10 years...

All was fine and dandy until they declined because I have a balance on 0% of their own credit card! I don't pay any interest and on time so it seems like such a silly thing to be declined on.

Other mortgage brokers have said I have to clear that CC, but that's about it, it won't affect my chances of getting one in principle.

You must be very tight on the affordability criteria OP, or have other debt too - balances on credit cards don't usually have such a large impact.

The reason given was "credit card mishandling" something like that. They said it's because I keep an ongoing balance (the 0%) that was it.

Our LTV is 80% so was completely baffled with a full "No" instead of a it's ok, but we won't give you the full amount.

Bank lending criteria can sometimes be skewed strangely. DH has his first mortgage with HSBC over a decade ago but we have never been able to get them to lend to us (or the amount we want anyway) - that’s with my entire banking history being with HSBC and no debt at all other than mortgage. NatWest are doing good mortgages at the moment but I’ve found them a nightmare to deal with so I’d recommend a broker. Halifax also have some good products but their lending limit was lower for us

After one hour over the phone... nobody really knows what it could be apart from a "missed payment" that was entirely their fault. (Direct debit got cancelled without my knowledge). They've promised to amend it but it might take up to 30 days. Terrible timing when I need my credit score to be immaculate.

Banks are just weird about stuff like this. I was once rejected for something 'due to using my overdraft too much'.

I had a £500 totally free overdraft that I sometimes slipped into because it didn't cost me a penny and savings of about ten times that amount that paid interest with the same bank.

They just couldn't see the logic that I was good not bad at managing money because I made money, OK probably only pennies, by doing it my way.

@BarbaraofSeville Whether an overdraft is interest free or not is irrelevant, simply by using an overdraft it suggests to a lender that your money management is poor as some months you have spent more than you had available. It's certainly doesn't suggest you are good with money.

@Rainbowhairdontcare, I think it's the missed payment rather than the credit card balance that is causing you problems, especially with that LTV. Most high street lenders only want squeaky clean borrowers now so I'm surprised that your broker suggested them if they knew about a missed payment in your history.
Have you asked HSBC to reconsider based on the fact it's their mistake?

That broker is useless and I'm not using him at all. The missed payment is new (only happened this Friday). They're ammending it but it will take up to 30 days. I'm also writing a formal complaint as they've given me two different reasons about why the direct debit got cancelled. I'll ask for a letter saying I was not at fault, so it can be forwarded to any underwriters.

A brokers sole job is to help find you a mortgage after reviewing all your information. To suggest you approach your bank directly is simply bizarre and suggest they either don't know what they are doing or that they don't think they can place you with any lender based on the information you have provided.

Remember you are at the mercy of all lenders, they can reject you for any reason and not tell you what it is. If HSBC were at fault then they should rectify it and update your credit report but it doesn't guarantee a mortgage.

I would find another broker.

@BigBadBarryatemyboat believe me I think he's completely useless. Only tried to use him because he was "highly recommended" and to placate my DH (who's never bought a house and is very worried of things going wrong).

He ended up giving me utter bizarre advice. couldn't understand how my DD who doesn't live with me FT isn't considered my dependant and had massive issues with going on maternity leave.

My guess is that he deals with people who have no clue whatsoever and whatever advice he gives is welcome. Me on the other hand, well this isn't my first rodeo and I'm very careful of my credit file (reason why I'm so annoyed about that late payment!) So to some extent I knew more than him. DH still thinks I only overwhelmed the broker with small things. I'm sorry s broker should understand every single bit of your finances to get you the best deal, full stop.

Credit cards have a huge impact on applications, if you run an online affordability calculator with and without a credit card balance you will see a huge difference in the amount you can borrow.

A lender would rather a loan than a credit card.

0% balance transfers show you have built up a debt, and have not been able to pay it down, with a potentially infinite timescale.

A loan has a finite time scale.

Also, without sounding harsh and reading between the lines, I think the broker referred you to you bank because he didn’t want you business.

@kamelo

I disagree, it's simply good cashflow management as monthly expenses vary. That account also paid cashback on debit card transactions so it made sense to put all purchases on the debit card and keep the money in savings where it paid interest and make use of the interest free facility.

I'm talking about being about £200 OD for a few days prior to a £2k salary being paid into the account, not being permanently overdrawn or anywhere near my entire salary being swallowed up by this overdraft, which was entirely academic. I had savings that could pay it back 10x over, but then I would have earned less interest.

Sadly Barbara the financial system does not agree with you, they see an OD as an emergency safety net.

To prefer to go into your overdraft other than pull £200 out of your £10k savings earning about 0.5% interest doesn’t show good financial awareness, even if the logic may be sound.

This was years ago - the interest rate was far more than 0.5%.

I now have a current account that pays 1.5% anyway so no danger of going into over draft and now I do all my spending on a credit card to get the cashback that way.

Nor do I foresee any need to borrow apart from some hobby stoozing type activities, but obviously the rewards are very much a token 'fuck you' to the banks these days rather than a serious money making activity, but it's still a few hundred quid a year.

@fromdownwest Yes that has been explained to me and why it needs to be cleared before completion (but not before application). I do think he didn't want our business, but there are plenty more that do so I'm not really worried about it all. I wish he had been honest from the start though. I've asked all mortgage brokers can you get me £x ? And work it from there.

The amount of hours I wasted with him is unbelievable though!

OP - how much is on the CC and has the balance been steadily increasing?

Are you tight on the affordability checks?

I got a mortgage with Halifax at 90% LTV and a fair bit of existing debt, may be worth approaching them.

HSBC are quite well known to hard very harsh underwriters. I wanted to move (had been with them for 20+ years) and already had a mortgage with them. The old mortgage was for less money but the monthly repayments were higher then the new mortgage.
They ummmmd and arrrrd over it for weeks. Then came back with a new offer over 30 years (I wanted 21 as was the old terms on previous mortgage).
I went with it as I couldn't face the same process again. But when my deal is up next year, I will be shopping around.

It's good to know a loan will be seen in better light than a cc as I was just debating clearing my v small cc by adding it to the car loan. I've spent the last few weeks of the school hols trying to cut down all my direct debits for different companies to reduce monthly spending ready for any new applications next year. My pension was the problem last time!

@Blankspace4 no it actually has been decreasing substantially. We will pay it off though as it seems like a major issue with most lenders. One broker played around with paying half the balance and it made no difference whatsoever.

We have a very healthy LTV, and the broker I've been talking to seems to think we'll get what we need no problem. However to avoid my DH any stress we might go for a cheaper house.

Without going into specifics, what % of your combined monthly income (take home) would be taken up by the mortgage and credit card payments?

(I work in financial services, not just being nosy!)

As it currently is 29% of our take home income. The mortgage would be 23.6%

That doesn’t seem excessive. How long have you both been with current employers for? If you bank with HSBC, how is your current account conduct - do you ‘sail close to the wind’ as it were, most months? You will have a Behavioural Score and it’s worth asking what this is. As I don’t think it’s affordability that is the issue (even with the CC).

Again, I’d recommend Halifax (no, I don’t work for them!) only because they are the largest mortgage lender - I think you can do an AIP (without affecting credit score) online. Going direct would save you any broker fees (if you’re paying them) and I found it all very simple.

@Blankspace4 well my behaviour is very good. Always have money in savings and receive £680 a month from a trust on top of my salary (which I don't take into account for affordability).

Just tried Halifax who couldn't give us a number, but said to call them. I think this probably is because my DH never bothered to change his electoral roll (after two years!) I fixed it for him yesterday, but would assume it will take some time.

The lack of electoral roll status may be causing more problems than the CC! It might take a few months to resolve too. However, if you are on the front foot and can explain it and that it’s being rectified, it may be that your partner needs to provide additional address/identity verification.

Have you got a copy of yours and DPs credit reports online?

HSBC actually have a behavioural score between 0 and 100 for every customer. Does your partner bank with them too?

Why aren’t you declaring the Trust income as income? Is it variable or could it stop?

(Sorry for all the questions!)

I do yup :)

My Experian is 975 his is 985.

My Equifax is 536 his is 409

He banks with Halifax (which is registered to our current address).

The trust income is tied to a property overseas and as such is variable.

Also my Equifax shows more debt than I actually have (hasn't been updated for some reason).

Interesting to learn about having a cc facility but not using it. I've had a card that I've kept for years as might need suddenly for major purchase but never used. Should probably just get rid of the account then?