HSBC mortgage declined, what next?

If you’re reading this guide, chances are you have had your mortgage application with HSBC declined and are wondering why, as well as what your options are. A declined mortgage application can be concerning, but in many instances, a resolution or workaround may be possible. This guide explains why you may have been declined a mortgage by HSBC and what steps you should consider next.

Common reasons for mortgage declines

There are several reasons why your HSBC mortgage application may have been rejected. Here, we cover these reasons and suggest what you might be able to do to overcome them.

• Credit Score: While the score itself isn’t a direct factor—it’s only an indicator—your overall credit profile has a massive impact on your ability to get a mortgage. There are several options you can consider, including looking at other lenders who may be more lenient towards adverse credit or increasing your deposit. Lenders are often more lenient towards adverse credit if you have a larger deposit.

• Affordability: You may not be able to borrow the amount you need due to several reasons, including omitting certain credit commitments or errors in calculating your income. For example, using variable pay as part of guaranteed pay might cause issues. To address this, ensure all credit commitments are declared, and income is accurately calculated.

• Property: Your application could be declined based on the property itself. It might not meet the lender’s criteria or be deemed unsuitable, such as if it’s currently non-habitable. A workaround might be to try with other lenders who consider the specific property type or condition.

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Other reasons for mortgage decline include lender-specific criteria and banking history conduct. Some lenders won’t lend to applicants with only one year of self-employment or those with a history of bankruptcy. Poor banking conduct, such as missed payments, frequently exceeding overdraft limits, or regular gambling, can also lead to a decline. To overcome these issues, look for lenders with more flexible criteria, ensure timely payments, manage your accounts to stay within limits, and minimise gambling transactions.

By understanding these reasons and exploring alternative solutions, you can improve your chances of securing a mortgage.

What to do if been rejected for a mortgage by HSBC

If your HSBC mortgage application was declined, here are the steps you can take:

• Find Out Why: Speak with your broker or advisor to understand the specific reasons for the decline.

• Check Credit report : If your credit score is the issue, consider increasing your deposit, as this might make other lenders more willing to accept your application. Check your credit report to address any issues on the report.

• Property decline: If the decline is due to the property type, you can either look at different properties or find a lender that is more accommodating to the specific type of property.

• Find a new lender: If you’ve been declined based on the HSBC’s criteria, you may need to identify a new lender whose criteria you meet. Mortgage lenders criteria can vary significantly

• Double check Application Accuracy: Double-check that all information on your application is correctly entered and matches your credit report.

• Appeal the decision: If you have a strong case, you can appeal the decision. While overturning a declined application is rare, it’s still worth attempting.

How long does it take to reapply after a mortgage decline? 

The length of time you should wait before reapplying for a mortgage with HSBC will vary based on the reason for the decline. For example, if it’s due to your credit score, ideally, you should wait at least three months to address the issues affecting your score, although the exact time may vary based on specific circumstances. However, you may be able to reapply with another lender immediately if they have different criteria.

If the decline is property-related, you could reapply immediately for a new property with HSBC or right away with another lender that may consider the property type.

Are HSBC a strict mortgage lender? 

HSBC offers a wide range of mortgage products with generous criteria, making them flexible in terms of loan amounts and property types. They consider high income-to-loan multiples and various property types, indicating flexibility in these areas. However, HSBC is typically risk-averse when it comes to credit conduct and banking history. A track record of bad credit or poor banking conduct can make obtaining a mortgage more challenging. If your credit isn’t perfect, having a larger deposit can increase your chances of acceptance with HSBC.

How likely are you to be accepted for a mortgage after receiving an Agreement in Principle (AIP)? 

If the AIP is filled in correctly, checked by a broker, and nothing is undisclosed, a high percentage of AIPs are successful at the full mortgage application stage. A good mortgage broker will ensure they thoroughly check all possible avenues during the AIP stage to avoid unnecessary declines later.

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How can Strive help? 

If you’ve experienced a declined mortgage application, don’t panic. Help is at hand—we’ve seen it all before. We’re here to help you understand why your mortgage application was rejected and find a workaround to get you back on track with your mortgage. Get in touch, and one of our experienced team members will be on hand to assist you.

Contact us today, and we’ll work hard on your behalf to find you a competitive mortgage.

For more information on mortgages for contractors, please contact a member of the Strive team, by emailing [email protected] or call us on 01273 002697.