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What To Do If HSBC Have Refused Your Mortgage

See how expert advice could still secure your mortgage approval, despite being previously declined

No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: September 20, 2021

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, whether that’s with HSBC or with an alternative lender.

In this guide, you’ll learn whether HSBC is likely to decline your for a mortgage, what to do if you’ve already been rejected by them and find out how the right broker can help you 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 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.

Reasons HSBC decline 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.

  1. 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.

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

  1. 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.

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.

  1. 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.

  1. Other issues

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.

We're so proud of our customers

We hate to see mortgage applications get denied, so we're extra proud when our customers find a mortgage through one of the brokers we work with.

Becky
Nottingham, UK
I followed my dream of becoming a self-employed fitness instructor but I was turned down for a mortgage by HSBC, who told me I haven’t been self-employed for long enough to get approved. Online Mortgage Advisor found me a new broker and he secured my mortgage straight away!
James and Ella
Bristol UK
Despite having two incomes, we were declined on affordability because some of James' income is paid as commission. Our original lender didn't recognise this type of income, so Online Mortgage Advisor matched us with a lender who did and we managed to get our dream home.

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…

  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.

How we can help you overcome these issues

If you think HSBC are likely to decline you for a mortgage because of any of the above issues, keep in mind that it could still be possible to get approved for the finance you need with the help of the right mortgage broker.

There are brokers in our network who have access to exclusive deals with HSBC, but if you don’t meet their criteria, they could help you find an alternative mortgage provider with a more flexible lending criteria.

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

Get Expert Advice

Speak to a broker who specialises in reviving declined mortgage applications

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.

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.

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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.

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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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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