Are First Direct Mad.......What do I do now?

julie2710

:mad: I am sooooo p'd off with First Direct at the moment. I will try and summarise a complicated situation as breifly as possible and would appreciate any thoughts on my next move.
I currently have a joint mortgage (226K) on my homw with First Direct (good rate - tracker 0.34 +base) I have been a customer of theirs for 20 years and had a mortgage with them for the last 10. My husband and I have split and we need to sort finances. We also have a BTL propert with a similar amount of equity as the main home, so as 2 very young children and I earn more than him plan is for him to have BTL and me to have the main home. This involves obviously transferring of deeds and debt respectively.
This is where it becomes tricky. Although I only earn 41K (55K with bonus) I have budgeted to make the mortgage payments and survive. In fact I have been making the payments with no support for the last 4 months. It is very obvious from my bank account that I have had no income from any source other than my wages, child ben for that time vs when I was with husband and he used to pay 750pm towards everything! Therefore despite probably not meeting the standard lending criteria of FDir they can see I have history of paying. After an hour of going over every payment I have made to everyone for the last 4 months and the fact that I have still remained in credit (not by a decreasing amount!) they have refused to transfer the mortgage to me!
Now my choice is this - I can transfer the deeds, get an indemnity agreement drawn up and continue with the current mortgage until such a time as I have reduced the equity and can transfer this to my name or rates go up and I move it to another lender. Problem with this is my ex has run up a lot of debt in the few months since the split (in his sole name) and has suggested over xmas that if he gets into trouble he will just declare himself bankrupt!!!
Other choice is to switch to another lender - have spoken to a broker who said he could get me a mortgage for the required amount but I will be looking at a minimum int rate of 4.15%!!!
First Direct very kindly told me I would have to sell my house:eek: I told them that would happen over my dead body - what a stupid thing to say in the current climate where did they think I would find a buyer and then I probably wouldn't have enough to buy another property so me and 2 under 3 year olds homeless!!!! Thanks!
So the question is what do I do now? Stick where I am, transfer deeds and hope ex doesn't go bankrupt or move to another lender at a much higher rate? Or does anyone know if I would be likely to get First Direct to reconsider? They're argument seemed to sit around - if you default at the moment we can chase 2 people rather than just 1 if we transfer the mortgage to you!!!
Sorry if this is a bit waffly but I am really angry as seems such a stupid, short sighted, "computer says no" based decision!!!

CLAPTON

confused .. you say you can remortgage at 4.15% .. then why not do that?

socrates

Good evening

I too am a customer of First Direct only 18 years sorry.

I read through your problem and I have found First Direct to be exactly as you say - when things are OK there is not a problem when anything wavers from the norm its a different story. Plus they know you cannot just transfer your mortgage like the old days. My advice is to try and organise a "clean break" on the divorce which may give you the funds you need to meet their criteria.

I would not move my mortgage - wait until things calm down a bit both in your personal life and in the mortgage market then re-approach the subject. As for their comments to sell up etc. I would make a formal complaint. In terms of mortgages I deal with a girl there called Nova - not a name you forget in a hurry - she is very friendly and does not treat you like she is trying to catch you out - which I know a few other of the girls there do. I think the reason they have changed is because now they are getting thousands of calls from non First Direct customers and are getting complacent knowing that they have some good products and they can cherry pick. I too complained that customers like you and I should even be getting a loyalty discount on our mortgages as compared to new customers.

I would also run this by a "trusted" mortgage adviser - I live in the South East and could recommend mine in private but you probably have your own anyway - plus there are several good ones on here.

julie2710

The remortgage at 4.15% is with a different co will have a set up fee and will cost me a lot more per month than my current mortgage - although I will be able to pay the mortgage I have it is going to be tight as I mentioned I am on my own with 2 very young children!
First Direct had said if they changed the mortgage to just one name the current rate the mortgage is on would still stand so 0.34% above base rate - you can probably see where I'm going with this - on a mortgage of 226K that's quite a big difference each month!
Making a clean break on the divorce won't unfortuantely give me any additional funds. My main priority is making sure my children have a roof over their heads and for the oldest I feel it is better to stay where we are, he has lived here all his life and has granparents and aunts and uncles withing spitting distance also great friends and neighbours.

socrates

So basically you have answered your own question you need to get the indemnity - how much does that cost?

CLAPTON

Well you need to consider not just now but a year or two on... its very unlikely that the bank of england rate will be 1.5% then
is your income likely to to increase greatly during that period?
What would you do if the rates went up to those only 6 months ago?
A clean break may not help you financially now but keeping a joint mortgage has a lot of nightmere potential although I don't really understand the details of the indemnity agreement.
Sorry I've no magic solutions;
sadly First Direct are being rational... selling probably is the rational thing to do...
but if 4.15% is do-able then I'ld be inclined to consider that carefully.

maninthestreet

226K mortgage on 41K income doesn't meet FD's lending criteria (3.5 x income). Even at 55K income, you still fall short. 4 months of paying the mortgage isn't a long enough to convince FD you can continue to do so for years to come. Sorry, but FD are right.

julie2710

I know that I don't meet the lending criteria - when I started paying the mortgage on my own repayments were over 1600 per month, now down to 1200 - so am putting the extra 400 away to pay off once I have secured the deeds in my name. Selling might seem like a rational thing to do but I would ask the following questions to those who might suggest it
1. Where do I find a buyer in the current climate?
2. Where do I then go with 2 children if I cannot secure a mortgage after the sale with what equity I have left? I live in the South East where prices are high and 2 bedroom places in this area are 250K. I need to stay here firstly for my job and secondly as a full time working mum I need the support of my family and friends who help with childcare and who also live here!
3. The only stability my sons have is the roof over their heads and the people around them and why should they be deprived of that?
I'm not sure how much the indemnity will cost but even a financial advisor I spoke to today said he thinks banks are stupid when they refuse to do things like this - they are not increasing their risk. He suggested the indemnity might be the best bet for the time being until the deeds are switched and I can then clear some of the mortgage in excess of what I am currently paying. Won't do that prior to the deeds being transferred in case ex changes his mind and then benefits from my overpayments.

silvercar

So keep his name on the mortgage. Get the deeds transferred to you (FD won't like that, but if your divorce settlement is stamped by the courts and the house is given to you, there is nothing that they can do about it). Then the home is yours and he has joint liability for the mortgage.

In the mean time get something registered on the deeds that you have rights to the house, I think it is under some matrimonial act. This stops him borrowing more money against the house.

The only thing I think the indemnity is for, is in case he goes bankrupt - to cover you/ the lender if the official receiver claims the equity in the house.

beecher

You could sell then rent. Remember that payments are very low at the moment, but will increase at some point in the future - how would you afford it when it goes up?

Conrad

Julie I've never come accross an indemnity as a possible solution to your problem. Are sure this is an option?
I just can't see an insurance company in this climate underwriting such a risk.

As for the lender being mad, they are just following the regulators guidance on affordability and suitability.
If they were to transfer the debt to a single name alone and things go wrong, there is every possibility the client would be back on this forum in 12 months saying "have I got a case against my lender for irresponsible lending - they knew I had 2 kids and that rates could increase, and now I cant afford the payments"

EVERY property will sell tomorrow if correctly priced to match the supply and capability of buyers. You are not seeling at a loss, as any capital gain was merely a function of a booming market, and those pennies from heaven obviously travel both ways. When you buy you will be able to buy for less than you would have paid 1 year ago, as the seller will have found those illusiory pennies from heaven have returned to the sky.

Best of luck