What To Do If Your Mortgage Application Is Declined By HSBC.
See how expert advice could help secure your mortgage despite being rejected by HSBC.
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In this article, you’ll learn about why HSBC might decline your mortgage application, what steps you can take if this has already happened and how working with the right broker can help revive your mortgage aspirations.
Are HSBC a strict mortgage lender?
Like all high street mortgage lenders, HSBC will usually take a strict stance against applications that fall outside of their lending criteria. Borrowers with “severe” types of bad credit, such as a recent bankruptcy or repossession, are often rejected outright, as are self-employed people without at least one year’s trading history and accounts.
The thing to keep in mind is that a rejection from HSBC on any of these grounds shouldn’t be the end of your mortgage plans. There are often specialist lenders for customers who don’t quite fit this criteria and an experienced mortgage broker will be able to help you find them.
How long does it take for HSBC to process a mortgage application?
It usually takes between two to four weeks to reach completion, depending on the valuation report and underwriting process. This time frame might be longer if your mortgage is complex because of, say, bad credit, for example.
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What to do if you’ve been declined for a mortgage by HSBC
If you’ve had a mortgage application turned down by HSBC, here are the steps you should take to give you the best chance of salvaging your homeownership plans…
- Don’t rush into another application
No doubt you’re tempted to rush out to another mortgage lender in the hope of getting a better outcome, but what’s to say you won’t get the same answer you got from HSBC? It’s vitally important that you approach the right lender next time around, as too many unsuccessful applications for finance in a short period of time can damage your credit file.
- Find out why HSBC wouldn’t lend to you
Ideally, you want all of the facts surrounding your mortgage rejection. If a problem with the property came up during the surveys, request a copy of the report, and if you failed HSBC’s credit checks, download all of your credit reports so you can see the issue for yourself, as well as correct any outdated or incorrect information ahead of your next application.
- Make an enquiry with us so we can match you with your perfect broker
Speaking to the right mortgage broker is the best course of action if you’ve had an application rejected by HSBC, or fear that they will turn you down. We will match you with a broker who has the right expertise and experience to turn your rejection into approval or even find you an alternative lender that will accept you, possibly on more favourable terms.Whatever needs to happen to get your mortgage over the line, whether that’s a re-negotiation, an appeal or a fresh application with a different lender, using our free broker-matching service will increase your chances of a successful outcome – make an enquiry to speak to an expert today.
Can you appeal the decision?
Yes, you can usually appeal straight away. This can normally be done either online or via email to the appropriate department (this information is typically found on the lender’s website, with instructions as to how to follow the correct procedure).
It’s probably best to wait until you have all the details as to why this happened and then consider all of your options before lodging an appeal.
Get expert advice immediately if…
- You need to borrow 5 times or 6 times your salary
- You’re self-employed with one year’s accounts
- You have any form of bad credit
- You have a higher appetite for risk eg: Gambling
- You want a guarantor mortgage
- You’re not sure who to re-apply with
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Common reasons why HSBC decline mortgage applications
You don’t meet their affordability criteria
All UK mortgage lenders base their affordability criteria on a multiple of the applicant’s income. The maximum many of them will offer is 4.5 times your salary, and HSBC typically cap their lending at slightly below that for most customers (4.49 times your salary). So, if your income multiplied by 4.49 doesn’t equal the amount you need to borrow on your mortgage, there’s a good chance that HSBC will reject you on affordability grounds.
You’re self-employed without enough proof of income
HSBC does offer mortgages for self-employed people, but you might have trouble getting one if you haven’t been trading in this capacity for long enough. Unless you have at least 12 months’ accounts to evidence your income, you’re unlikely to be approved for a mortgage.
You failed HSBC’s credit checks
HSBC’s mortgage underwriters can be strict when it comes to bad credit and there are many types of it that usually trigger an automatic rejection. They are likely to decline your mortgage application if you have a debt management plan, arrears on an existing debt or a county court judgement registered less than 36 months ago.
Their mortgage rejection rate is high for these credit issues, as well as bankruptcies declared within the last three years, so if you applied for an HSBC mortgage with severe bad credit, there’s a chance they’ll either decline you outright.
Property issues came to light during the surveys
Some people have a HSBC mortgage approved subject to valuation, only for an issue with the property to crop up during the surveys. This might be because a build type that HSBC doesn’t lend for – such as single skin construction or a British steel frame – was found, or the land that the property sits on is contaminated.
HSBC does cover a wide range of property types, but there are ones that call for a more specialist lender, and the brokers that we work with know exactly which lenders to call on.
You need a guarantor
Guarantor mortgages are often a great way for young people to get on the property ladder with the help of family support. If you have a parent or other close family member who’s willing to put up their savings or home as security for the debt, it may be possible to get a mortgage with no deposit at all.
The only problem is that HSBC doesn’t offer these products and will turn down anyone who applies for a mortgage with this requirement.
There are many other reasons why HSBC might reject you for a mortgage, from a simple admin error on your application to the underwriters reporting a history of excessive gambling during their checks.
But the good news is that the brokers we work with don’t discriminate and can potentially offer you a lifeline regardless of why your original application was declined. Speaking to them before you re-apply could be the difference between approval and another rejection, regardless of the circumstances.
How long does it take to re-apply for a mortgage?
This all depends on the reasons you’ve been declined – this is why it’s most important to establish these facts first before re-applying with a new lender.
If, for example, you have adverse credit on your record this may take anywhere up to a matter of weeks or, in the most extreme cases, possibly years to resolve.
Once you know why you’re application was declined you can then take steps to resolve these issues thoroughly. When this has been done, with the help of a mortgage broker, your new application should hopefully take as long as is standard (see above) to process and get the approval you need.
How Online Mortgage Advisor can help
The right mortgage broker, one who specialises in customers who’ve been declined by high street lenders, can help you boost your chances of still getting a mortgage, regardless of why this has happened.
If there’s scope to appeal against HSBC’s decision and that’s in your best interest, your broker will spearhead the renegotiations and help you get the most favourable outcome. But maybe there’s a much better deal out there with another lender, in which case your mortgage advisor will hunt it down for you and help you secure it.
We offer a free-broker matching service that will pair you up with the mortgage expert who’s best equipped to help you turn HSBC’s rejection into a mortgage promise. Call 0808 189 2301 or make an enquiry online and we’ll introduce you to your ideal advisor today.
HSBC do not treat lodger income as declarable earnings for a mortgage application. There are one or two high street lenders and a number of specialist providers who do. The right mortgage broker can help you find the best lending options for this type of income.
This simply means that HSBC has progressed your mortgage application onto the underwriting stage, where further credit checks will take place and the information you have provided will be cross-checked. If the checks are being carried out manually, this might be because the lender’s automated systems were unable to determine your eligibility.
This is usually nothing to worry about and doesn’t necessarily mean HSBC are about to reject you.
If this is what’s showing up when you check in for an update on your application online, it basically means that HSBC is preparing to make you a formal, binding offer after approving your mortgage application.
HSBC mortgage offers are usually valid for six months unless otherwise specified.
It doesn’t necessarily mean they’re going to reject your application. Sometimes the finer details of a mortgage application need to be cross-checked, especially if it’s a complex deal involving a customer with bad credit or an unusual property type, for example.
You can always contact HSBC for an update and ask them why there have been delays. If you also seek professional advice from a broker, they can interpret what HSBC has told you and let you know what the full implications of the delays could be.
Mortgage lenders in general don’t have a specific score you need to exceed before they’ll accept your application and this includes HSBC.
They will, however, review your credit history against their internal lending criteria to assess if any issues exist and, if so, whether your application is deemed too risky to take forward.
But there are other criteria involved too, such as your deposit/loan-to-value, your age at the point of application and your monthly income/outgoings, which will all be assessed during the process.
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