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Mortgage Action Plan! What To Do If HSBC Rejects Your Mortgage Application

Mortgage Action Plan! What To Do If HSBC Rejects Your Mortgage Application

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Many people looking for a mortgage will automatically apply to the bank they have accounts with and assume that it will likely be approved.

However, every bank or lender will have several criteria and policies. A high street bank will inevitably reject thousands of people who have a more substantial chance of mortgage approval with a specialist mortgage provider.

In this guide, the Revolution Brokers team summarises some of the common reasons for an HSBC mortgage rejection - and how you can find lending elsewhere.

If you have been turned down by HSBC or any bank and would like independent help with finding a more suitable lender, please ring Revolution on 0330 304 3040, or drop us an email at info@revolutionbrokers.co.uk.

The following topics are covered below:

The Five Main Reasons HSBC Refuses Mortgage Applications

HSBC Has Refused my Mortgage - What Now?

The Five Main Reasons HSBC Refuses Mortgage Applications

While not exhaustive, the below are the five most common reasons for an applicant to be turned down for mortgage lending from HSBC.

  • Your application didn't pass the affordability assessment.

HSBC will need to assess your annual income and calculate a multiplier of those earnings to arrive at a maximum they will lend. HSBC tends to offer up to 4.5 times your earnings, and so if you want to borrow more, it's likely you will be turned down.

Note that some lenders offer five or even six times your salary as a mortgage cap. Many have flexible calculation policies that mean you could borrow the required value from a different provider.

  • You are self-employed and don't have sufficient documentation.

You can get a self-employed mortgage from HSBC, but they have strict rules about how long you have been trading. If you have less than two years of accounts or tax returns to prove your average income, HSBC will usually turn down the application.

  • There were problems with the credit checks.

The underwriters at HSBC and, indeed, most high street banks have no wiggle room, and so if you don't meet a lending policy due to a credit issue on your file, the rejection is automatic.

Applicants with a DMP, debt repayment arrears or a CCJ registered at any point in the last three years are usually refused.

  • The survey report is not satisfactory.

Even if you have an agreement in principle, if the survey reports anything that the bank doesn't accept, it will withdraw your HSBC mortgage offer.

There are many potential reasons, such as the market value assigned by the surveyor or the property being deemed non-standard, such as having a steel frame.

  • You require a guarantor.

Guarantor mortgages are a popular way for younger people and first-time buyers to purchase their new property. A guarantor is usually a parent or close relative who will guarantee your debt and mean you can get a mortgage with a small deposit, or even no deposit at all.

HSBC does not offer guarantor mortgages and will turn down any application reliant on family support.

Please don't panic if you have been turned down for these reasons or anything else. High street banks are notoriously strict, and given that they aren't mortgage specialists, they are rarely willing to negotiate or offer any flexibility with their policies.

Revolution Brokers helps thousands of people find the mortgage they need - and the rates on offer from niche lenders are often highly competitive compared to mainstream banks.

From lenders who prioritise helping first-time buyers get onto the property ladder to self-employed specialist mortgage providers, there are many options.

HSBC Has Refused my Mortgage - What Now?

Don't be disheartened if HSBC has rejected your mortgage application! This happens frequently, and Revolution is on hand to make sure you find the right lender.

First, avoid making any knee-jerk decisions or firing off applications to other lenders. If one bank has turned down the application, it's essential you know why to avoid making more applications to banks with similar policies.

Multiple failed applications can cause further problems with numerous credit checks on your file, so it's far preferable to make one successful application than many failed ones.

We recommend contacting HSBC to ask why the application has been refused, along with access to all reports or files used in making the decision. This is useful to identify the criteria that caused the problem and identifying a suitable alternative.

Finally, give the Revolution team a call. We are experts in negotiating mortgage terms and can invariably find a better offer from a lender who is more than happy to accept you as a new customer.

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FAQs - What to Do if HSBC Rejects Your Mortgage Application

Here we'll answer a few of the common questions we receive about applying for a mortgage through HSBC.

How Long Does It Take to Get an HSBC Mortgage?

Most of the time, you'll wait around two weeks for a response back from submitting a complete mortgage application. This can be longer in more complex scenarios.

Can I Apply for an HSBC Mortgage While on Furlough?

Unfortunately not. Applicants on furlough cannot apply to HSBC for a mortgage - although many alternative lenders can help.

Can I Use Income from a Lodger Towards an HSBC Mortgage?

HSBC will not include lodger income on your affordability assessment, so they will exclude these earnings from the application process.

Is HSBC a Strict Mortgage Lender?

It depends. Like all high street banks, HSBC offers mortgages to applicants who meet all of their criteria and lending policies.

They can be much stricter than specialist providers and will not negotiate terms if you fall outside of any of their requirements.

What Does a Mortgage Referral from HSBC Mean?

If your mortgage application with HSBC has been referred, that means they have passed it to the underwriting team for more thorough assessments, credit checks and property inspections.

Can I Go Ahead with an HSBC Mortgage if The Application is Ready to Offer?

A mortgage ready to offer means it is at the stage where you can progress from an agreement in principle to a formal offer to lend.

We'd always recommend consulting Revolution before going ahead to be sure there aren't better deals or cheaper mortgage interest rates available.

What Can I Do If my HSBC Mortgage Application is Delayed?

A delayed mortgage application can be frustrating but doesn't always mean you will be rejected. It depends on the reason for the delay - it could be as simple as waiting for a surveyor to return a valuation report, or maybe because a more detailed assessment is required.

If you are keen to proceed with your property purchase and HSBC have delayed the application, it's an excellent opportunity to give us a call and assess whether there are more competitive deals that could complete in a faster timescale.

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature. We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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