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.
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.