HSBC rejected mortgage due to subjective reason but lending criteria passed

[bloodymortgage]

As the title says, my broker tells me I passed all tests during underwriting , including affordability which was tested first (5 weeks ago). However, at the very end the underwriter has "subjectively" rejected it citing future potential interest rate increases.

My broker tells me that I already passed the usual stress test so it's more than that and there is no good reason why I've been rejected. Even the HSBC business relationship manager is stumped and told my broker that he must have read the decision wrong! That manager has tried for 3 days to get an explanation from the underwriter but she is ignoring all internal emails on the matter.

I've now had to apply with NatWest and have that application escalated as well down the legal line now with completion in less than 6 weeks. Of course now I'm stressing that that application will fail too! (And the arsehole estate agent is now aware due to the second valuer and isn't best pleased to say the least!!).

Mortgage requested was £215k (LTV 73%). My salary is c£90k and I get annual bonus of £7.5k. No credit card debt but monthly loan repayments of £1240. Application in my name as my DH is self employed with variable income and his SA302s show nil due to carried forward tax losses.

What a bloody nightmare!

Anyone had similar happen?

😣😩😣

No, In haven’t, but I know your husband is probably considered a dependent by the bank and they have doubled the cost of living algorithm for dependents. What fixed term did you apply for? 2 years? It might make sense if they think you can’t afford a higher (SVR) rate in 2 years because we are due more interest rate hikes. If you applied for a five year fixed rate, then I can’t help you, as that would make no sense.

Also, what mortgage term? We dragged ours out to 33 years to pass the tests as also only one salaried person and one dependent. But ours was 465k house, 108k income, 95% LTV and we got approved.

Maybe a heckin lot has changed in six weeks.

@KievLoverTwo Thanks for your reply.

So my broker told me that husband will not be considered a dependant as he is self-employed and he explained to them why he wasn't on the application. We have a young baby so I should only have my son as a dependent (and no childcare costs when I return to work next month from Mat leave). I supplied a letter from my employer confirming work details.

It was a 5 year fixed rate for a term of 22 years (I'm 42 - today haha) 🤷‍♀️

You can stretch that out another 11 years. They were prepared to give mortgages out to 75 as long as adequate pension info is supplied.

Things are getting bloody ridiculous now.

There has literally been no communication at all. No suggestion to increase the term, or even to offer less than what I asked for (not that less would be any help).

Just pretty much "you passes the lending criteria but I'm saying no - no further discussion". I've literally sat panicking and crying for 3 days now and the estate agent topped it off with the bollocking he gave me today over it!

Error

another 13 yrs

You need to get a broker, a good one, one who does soft checks that don’t affect your credit rating.

@KievLoverTwo I have a broker and he did the soft checks and I passed them, every single one. My broker has said this is the first time this has happened and he genuinely cannot understand why and the underwriter has made a mistake. Even the HsBc relationship manager agrees with him but the underwriter has refused to engage with her.

So you aren't actually back at work yet......there is a similar thread actually similar story. Lots of banks are wary of applicants who are on maternity leave - a letter from your employer is hardly evidence you are definitely going back to work - anyone could get one of those knocked up? I would hazard a guess it's because you have made a some application whilst on maternity leave....

Maybe they thought you are a money laundering risk - they couldn’t tell you that as it would be a criminal offence of tipping off. Anything weird in your background or finances?

OP has a broker already.

I really feel for you, @bloodymortgage. What a nightmare. Any chance you can apply to pay off whatever loan you’re repaying to give you a bit more monthly stretch?

I suspect the mat leave + dh self employment has tipped you over the risk threshold, but maybe they can't blatantly say they expect you to be on mat leave again/reduce your hours in the next year or so, so they've blamed interest rates.

Why did the estate agent have a go?! It's not your fault is it!

maybe you’re also exposed to loan repayment interest rates going up! you have a healthy salary, I really think it sounds overzealous. How disappointing for you op.

I'm returning to work on 1 July and already confirmed to them that I can provide my July payslip as evidence if they want it as completion likely to be end of July, by which time I'll have been paid. I've been off one full year on mat leave and it's highly unlikely I'll ever be on mat leave again at my age (never mind my fertility issues - but that another story!).

There's nothing sketchy in my past to suggest money laundering. Im a senior manager in a big 4 accountancy firm (tax advisor) and have been employed full time for years.

Ah yeah maybe it's the loan payments

It's the maternity leave and the self employed partner. You're too much of a flight risk. You'll need to wait and show three months pay slips.

And the exceptionally high loan payments

I suspect the heft loan repayment might be the reason - a large personal loan indicates that you are not credit averse which might indicate to them you are likely to borrow more. Whether you plan to isn't the point, you have it on your credit now

@volcanoroll we used the same estate agent that we are buying from to sell our house and he is just really unprofessional and rude. His words were "in the 20 years I've never once heard of someone needing a second valuer for a mortgage - so you expect me to jump through hoops?". Prick. He's just pissed he's having to get off his arse to let the valuer in - and that I didn't use his in-house broker.

@KetoQueen I don't think that could be it as the loan repayments are fixed until loan is repaid.

So how can it be the loan repayment when I clearly pass every banks affordability test when disclosing the loan, so that I could apply for a higher mortgage?

Highlighting also that the underwriter that first picked it up at HSBC passed the affordability - this is why my broker is so shocked. It passed but then another underwriter said no.

It's industry standard to request 3 months of payslips though.....you can't because you are on maternity leave...offering Julys one is pointless as you want to have completed by then....you could turn around tomorrow and say you aren't going back the letter from your employer isn't worth the paper it's written on in this market with how strict lending criteria has become.....

Also loan repayments of over a grand is really pretty high......more than many peoples mortgages....maybe even close to the mortgage repayments you have applied for...

@febrezeme I take your point but I've read the lending criteria which states that for mat leave applicants a letter is required. I also had to provide mat leave payslips which I did. I got full pay for 5.5 months, stat pay for 3.5 months and nothing for these last 3 months (except small sums of leftover stat pay). Why have a policy for mat leave applicants if they won't lend to them? They also wanted a payslip dated in the past 35 days which I provided.

@febrezeme The loan repayments are made up of:

£575 car finance loan
£665 loan for fertility treatments

Whether that's even relevant!

I guess I'm struggling to understand - if I earned half of what I do but had no loan, what's the difference? My credit is perfect, never missed a payment etc

I think your broker needs to work harder. It is their job to find a solution to this. You shouldn’t be fretting about what to do next they should already have this in hand.

They are also cutting it very fine. Unless your purchase has moved miraculously quickly.

We had difficulties with affordability criteria changing very quickly at the start of this year which meant our whole original plan of porting our existing mortgage couldn’t happen. When our broker came to us with this news he also came with a solution, he’d done a reasonable amount of fishing in the market and had found somewhere that would accept us. There was only 1 mortgage provider that would lend to us, the term was longer and we had to put more cash into the house than originally planned but it was a solution and it worked.