In this blog, we thoroughly explain the HSBC Mortgage Criteria to help you understand your eligibility before you apply. If you have any questions, or are unsure whether you fit the HSBC criteria, please contact us and one of our friendly mortgage advisors will be able to help.
History of HSBC
HSBC first opened its doors in Hong Kong in 1865.
The bank was founded by Thomas Sutherland, a Scotsman who was working in Hong Kong for a large shipping firm. His aim was to set up a local bank that would support international trade and the bank was launched with the help of 14 of the biggest firms in the Hong Kong business community.
HSBC international bank now has a strong presence in the UK in business and personal banking and mortgage lending.
You can also find out more about the history of HSBC at their dedicated website – https://history.hsbc.com/
HSBC Mortgage Lending
HSBC are usually a very competitive mortgage lender in the UK market in terms of pricing, making them a popular choice for a lot of borrowers.
Below we have outlined the HSBC Mortgage Criteria which encompasses their key underwriting positions for mortgage business to help you understand if they are likely to offer you a mortgage. The criteria are split into three sections, the first refers to the mortgage applicant(s), the second refers to the type of borrowing, and the third refers to the property to be mortgaged.
Section 1: HSBC Mortgage Criteria for Applicants
1. Applicant(s) age
HSBC bank will agree to lend to a mortgage applicant from the age of 18 and will take a mortgage application to run up to the age of 80. Where the mortgage runs into retirement, HSBC requires adequate evidence of the applicant being able to maintain the mortgage.
2. Applicant(s) Credit Score
Like most modern banks, HSBC will credit score applicants as part of their mortgage decision process.
HSBC is unlikely to lend to applicants with recent payment problems such as 3 months overdue payments in the last two years, or County Court Judgements over £500 within the last three years.
3. Applicant(s) needing a Guarantor
If you require a Guarantor for your mortgage HSBC are not a suitable mortgage lender for your circumstances. The reasons why you need a Guarantor may include, but are not limited to, having just started a new job, only having a part-time job, or you are currently unemployed. Guarantor mortgages are typically designed for borrowers with a low income who do not qualify for a mortgage on their own.
4. Multiple mortgage applicants
HSBC’s mortgage criteria limits the number of applicants on a mortgage application to 2 total. If you require a mortgage for more than 2 applicants, please speak to one of our mortgage experts who will be able to advise the best mortgage lender for your circumstances.
5. Foreign national applicant(s)
HSBC is a useful bank for mortgage applicants who do not have Indefinite Leave to Remain or Right of Abode, particularly if the applicants are higher earners. HSBC requires foreign national applicants to have a maximum LTV of 75% and the deposit must be from the applicants’ own funds, not gifted.
6. Overseas and Ex Pat applicant(s)
HSBC regularly provides lending to overseas nationals and UK expat customers.
For more information on this, please visit our expat mortgages page.
7. If applicant is a Portfolio Landlord
HSBC’s mortgage criteria states they do not lend on a buy to let mortgage basis to Portfolio Landlords.
If you already have a mortgage with HSBC please visit our page dedicated to HSBC Mortgage Rates for Existing Customers.
Section 2: HSBC Mortgage Criteria for Borrowing
1. Residential mortgage applications with a buy to let in the background
HSBC will expect to see rental income on a tax return and will factor in all business costs associated with a buy to let for affordability purposes.
2. Non-simultaneous sale and completions
Where the mortgage borrower intends to run two residential mortgages for a short period of time in these circumstances HSBC will run affordability calculations on both mortgage balances and running costs. This rarely makes this a practical option with this lender.
3. Interest only mortgage
HSBC’s mortgage criteria states that interest only mortgage applications can be taken up to a maximum 60% loan to value (or 50% for lending over £2 million). They will consider interest only residential mortgage applications provided the one applicant has a minimum income of £75,000.
4. Porting a HSBC mortgage
HSBC allow existing borrowers to port an existing mortgage product onto a new property provided there is at least six months remaining on the current rate. Read more about porting a mortgage here.
Section 3: HSBC Mortgage Criteria for Property
1. Property with annexes
This is commonly acceptable with HSBC provided the annex is only occupied by a family member or by staff employed in the main dwelling. No subletting is allowed.
Annexes can be a problem if there are separate services or electric meters to the annex or a separate council tax account.
2. Borrowing for flats
As part of HSBC’s mortgage criteria, applicants are only allowed to borrow up to 85% for flats, or 80% for new build flats.
Studio flats are considered by HSBC subject to valuer’s comments.
3. Criteria for unusual construction types
- Timber frames – Properties built after 1965 are acceptable for mortgage purposes.
- Wimpey No Fines – can be accepted subject to valuer’s comments to 80% loan to value (please note that some deterioration has been noted in this type of construction so they are rarely a sensible purchase).
- Steel frame properties – corrosion can affect the frame where there is water penetration so all mortgage applications with HSBC are subject to structural engineers’ reports and can be no more than 80% loan to value.
- Kit-built properties – This includes construction types such as Huf Haus/Potton/Skandia-Hus. It is possible to obtain a mortgage with HSBC for these builds up to a maximum of 80% loan to value with suitable warranty provision.
4. Borrowing against recently purchased properties
This is possible through HSBC, but not where the mortgage applicant wishes to raise extra funds or there was a sub-sale type transaction on the purchase.
5. Part residential part commercial property
Commercial property can be considered for a mortgage by HSBC, but only as a minor part of the property provided the whole property can be sold as a complete residential unit. This does not include properties such as holiday lets.
6. Multiple kitchens
HSBC’s mortgage criteria states that properties with 2 kitchens can be considered subject to the valuer’s comments.
7. Leasehold properties
Leasehold properties must have more than 30 years remaining at the end of the mortgage term to pass HSBC’s mortgage criteria.
The above covers the most common questions we are asked and problems we face when trying to secure a mortgage through HSBC for applicants. Should you have further questions or a unique situation and would like to speak to one of our advisors, please call us on 020 8979 9684.