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What to do if HSBC Have Declined you for a Mortgage

Updated: April 1, 2021

Pete Mugleston
Author: Pete Mugleston Mortgage Advisor, MD

Important

HSBC is a good, well-respected mortgage provider but no lender in the UK is able to accept every single application they receive. The aim of this article is to help you understand what your options could be if your mortgage application has fallen outside of HSBC's lending criteria.

If HSBC has rejected your mortgage application or you think they’re going to, you’re certainly not alone.

Firstly, high street lenders turn down borrowers all the time and many of them go on to get the finance they need elsewhere. Secondly, we’re here to help you revive your home-buying plans.

Many would-be borrowers who are told they don’t qualify for an HSBC mortgage assume that they’d get the same outcome elsewhere, but that’s simply not true. There’s a vast market out there and some mortgage lenders have more flexible criteria than others, but it can be difficult to find the right one without expert advice.

This is where we come in! We can match you with a broker who knows the market inside out and regularly offers lifelines to people who’ve been declined for mortgages by a high street lender.
Not only could the right mortgage broker help you renegotiate with HSBC, they might even be able to find you a much better deal with a different mortgage provider.

Don’t throw in the towel just yet! The expert brokers we work could help you revive your home-buying plans

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  • Check mark Rated 5 star on Feefo

5 reasons why HSBC rejects mortgage applications

1. 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 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.

No doubt this is frustrating, but it doesn’t necessarily mean you can’t afford a mortgage full stop. There are lenders who are more generous with affordability, and their income multiples stretch to five times salary, and even six times salary under the right circumstances. A broker with the right expertise will know exactly which mortgage provider to approach for higher-income multiple lending, and which ones you fit the lending criteria for.

Even if you don’t qualify for higher-income multiple lending, there could be workaround solutions that your broker could explore with you.

For example, you might have other sources of income that you didn’t realise can count towards your mortgage, such as benefits and investment profits. This could either give your broker room to renegotiate with HSBC, or find you another lender who would be happy to let you declare this extra capital

2. 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 24 months’ accounts to evidence your income, you’re unlikely to be approved for a mortgage.

While some people might be in a position to delay their plans until they’ve been self-employed long enough to meet HSBC’s criteria, others won’t be, and if this applies to you, we’ve got good news: there are brokers in our network who specialise in self-employed customers and they can introduce you to lenders who are able to offer mortgages to people with just one year of accounts.

Some of these lenders might even let you get the ball rolling on your application with only nine months’ trading under your belt.A broker with the right knowledge and expertise can help you work out if delaying your plans and re-applying with HSBC is in your interest, or whether making a fresh application with a lender who better understands the needs of the newly self-employed is a better option.

3. 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 types of bad credit, as well as things like bankruptcies declared within the last three years, so if you applied for an HSBC mortgage with credit problems, there’s a chance that they’ll either decline you outright or hit you with a high interest rate.

If you’ve already been turned down on these grounds, we understand this can be disheartening, but having bad credit of any kind shouldn’t mean that you can’t get a mortgage. It just means that HSBC might not be the best lender for you.

The good news is that we work with specialist bad credit mortgage brokers who help people with all kinds of issues get a mortgage every day. They have deep relationships with flexible mortgage providers who are willing to take the age and severity of your bad credit into account, instead of saying ‘no’ outright or penalising you with hefty rates.

4. Property issues came to light during the surveys
Some people have a HSBC mortgage approved subject to valuation, only for a deal-breaking 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.

If you’ve been told that you can’t get a mortgage because of an issue with the home you’re buying, try to keep in mind that this might be a simple case of approaching the wrong lender. 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.

5. 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 enquires about a mortgage with this form of family support.

If HSBC has declined you for a guarantor mortgage, don’t panic. This was always going to be the case since it’s outside of their lending policy, but there are a range of specialist lenders who offer guarantor mortgages, and a broker with the right knowledge and expertise to arrange one of these agreements can help you find the best deal for one.

Been declined because of something else?

We can still help you salvage your home-buying plans! It doesn’t matter if you’ve been declined for a reason that isn’t listed here. There are many other reasons why HSBC might reject a mortgage application, 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 the reason HSBC declined your original application. Speaking to them before you re-apply could be the difference between approval and another rejection, regardless of the circumstances.

Important

If you’ve been offered an agreement in principle by HSBC but fear your application might be declined before completion, it’s not too late to take a pause for professional advice. The brokers we work with can tell you if sticking with HSBC is in your best interest and search the market to check if there’s a more suitable lender out there.

What you need to do next

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…

  1. 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.
  2. 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.
  3. Make an enquiry with us so we can match you with a broker
    Speaking to a mortgage broker who specialises in customers who’ve been rejected by a high street lender is the best way to boost your chances of success when you re-apply. Whether your best bet is to renegotiate with HSBC or find a more appropriate lender, the ideal broker could be the difference between mortgage approval and another rejection.Our free broker-matching service will only pair you with a fully-vetted advisor who has the right expertise to get you a mortgage at the second time of asking. They will advise you on what to do next, search the market to make sure you’re getting the best deal and guide you through every step of the process, helping you take care of any paperwork along the way.

The right mortgage broker could help you turn that rejection into an approval

The right mortgage broker, one who specialises in customers who’ve been declined by high street lenders, can help you boost your chances of getting a mortgage, regardless of whether HSBC has just rejected you, or you think they’re about to decline you.

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.

Don’t throw in the towel just yet! The expert brokers we work could help you revive your home-buying plans

  • Check mark Whole of market mortgage experts
  • Check mark FCA regulated
  • Check mark Rated 5 star on Feefo

FAQs

What is the timescale for a HSBC mortgage?

After you’ve submitted your mortgage application, HSBC will instruct a valuation and begin the underwriting process. This usually takes two weeks to reach completion, but this time frame might be longer if your mortgage is complex because of, say, bad credit, for example.

Can I get a HSBC mortgage if I’m on furlough?

HSBC are not currently considering mortgage applications from customers who are on furlough, but there are a range of lenders who are. A mortgage broker can advise you on whether to delay your application and proceed with HSBC when your furlough is over, or go ahead and apply with another lender who is working with furloughed applicants.

You can read more in our guide to getting a mortgage while on furlough.

Can lodger income count towards a HSBC mortgage?

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.

Are HSBC strict mortgage lenders?

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 are often rejected outright, as are self-employed people without enough income proof.

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 HSBC doesn’t have the flexibility to cater for, plus a mortgage broker with an existing relationship with HSBC might be able to renegotiate with them on your behalf.

What does it mean if HSBC has sent my mortgage for manual referral?

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 mean HSBC are about to reject you, but do keep in mind that it’s not too late to take a pause to speak to a broker at this stage. They can double check whether the HSBC product you’re applying for is the right one for you.

What does it mean if my HSBC mortgage status is ‘ready to offer’?

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. At this stage, you can still take a pause to speak to a broker and find out whether the deal HSBC is offering is the absolute best one available to you.

HSBC mortgage offers are usually valid for six months, unless otherwise specified.

What should I do if my HSBC mortgage application has run into delays?

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.

A delayed mortgage application is also the perfect opportunity to speak to a mortgage broker to double-check that the product you’re applying for is the absolute best on the market. Moreover, if HSBC are taking too long and time is of the essence, a broker might be able to find an alternative lender who can complete your mortgage much quicker.

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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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