Simon and Susan Pinnington have been HSBC customers for more than 20 years. When they decided to sell their £840,000 home and move to a new property, they asked to transfer, or “port”, their small £189,000 mortgage.
This should have been a smooth process.
They were buying a five-bedroom detached house in Maidenhead for £900,000, but did not want to borrow any extra money as they could pay the additional £60,000 from their savings.
Neither did they want to extend the term of the loan, which had less than nine years remaining.
The couple, who own their own optician franchise, went through a detailed financial review with one of HSBC’s own mortgage advisers. She determined that the transfer was affordable and submitted the application to the underwriting team for approval.
That was when things started to go wrong. To their surprise, the underwriter declined the application, saying the loan was not affordable.
When the Pinningtons queried this, they received an email saying: “I have spoken with the underwriter who assessed your case. Unfortunately, the decline decision still stands.
“Because you are moving to a new house we have to assess the mortgage application under current guidelines and we need to demonstrate that the mortgage is affordable to you now and if interest rates were to rise.”
This statement is not strictly correct.
The regulator did introduce tough requirements in April but put in place “transitional arrangements” so that existing borrowers who don’t meet the new tests are not disadvantaged.
These allow lenders to approve changes to existing mortgages as long as the borrower does not want to borrow more or extend the term of the loan.
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