Should I complain?

BarmyBubba

Should I complain?

I have recently decided to get onto the “property ladder” and buy my first home so a mate of mine recommended a Mortgage Broker.

I have a deposit of £12,500 thanks to my dad; he must want rid of me. I was also made redundant back in March and although I got a new job within a week I went without a wage for around 6 weeks until I got my first wage. As it happened my redundancy arrived in my bank on the same day.

In this period I missed both my credit card and bank loan repayments but given that before this I had an excellent credit repayment history it would have little effect on my credit rating. In fact I signed up to Experian and it said my credit rating was excellent and gave me about 920 points out of 1000.

Anyway my mortgage advisor struggled to find me a deal but finally managed to find me a mortgage with Northern Rock. Because I was on the borderline of being accepted he spoke to them to give them an idea into my background and the unfortunate redundancy.

They said there was little problems and because I have a bank loan with them it seemed to work in my favour.

Anyway, I failed their final credit checks so that was that and said thanks and goodbye to the advisor.

I then tried with my own bank The Halifax. I applied online; got the mortgage promise and spoke to one of their advisors who said that although I missed those payments earlier in the year there should be no problem. It was all going through until I once again failed because of my credit score.

I thought that was it, and I was consigned to life with the parents for a bit longer.

Anyway, the advisor at The Halifax mentioned that he could try an application for me with a bank called Birmingham Midshires. I had never heard of them but he said they give mortgages to people who are classed as a higher risk. I thought it strange how someone at The Halifax could try me for a mortgage with BMS but thought go ahead.

Luckily I passed the credit checks and was sent the Key Facts document and I was shocked to see that I would be paying back £100 more a month with the BMS mortgage than the one The Halifax were going to give me meaning an extra £40,000 over the term of the mortgage.

But as I want my own house, and have an offer in on one I accepted.

I decided to do some research into BMS as I had never heard of them. You can probably imagine my shock when I found that they are part of The Halifax, who had previously turned me down.

Is it just a way for The Halifax to make greater profits, by denying those who are slightly higher risk a mortgage, then passing them on to BMS and enforcing a higher interest rate on them?

Is it worth complaining to anyone? Anyone else encountered this?

AndrewSmith

Birmingham Midshires are a well known lender who have been around for a number of years.

What exactly would you want to complain about?

Birmingham Midshires are owned by HBOS (Halifax Bank of Scotland Group) so it would be a natural progression for the Halifax adviser to suggest a company within their own group if you fail to meet the criteria of the Halifax. In fact it is the only alternative lender they would be able to suggest.

For whatever reason you did not fit the criteria for the Halifax. You cannot complain about them not accepting you for a mortgage as every lender has no obligation to lend you anything and can refuse or decline an application without reason or explanation.

Many lenders have other subsiduary companies. Nationwide own a company called UCB homeloans, Skipton Building Society own Amber Homeloans etc etc.

The fact that you were declined by the Halifax, whilst unfortunate, is something that you just have to accept, and will be based on your current credit score, credit status, length of time in current employment etc etc. They use a largely automated system for their decision making. There isn't a person sat there deciding which ones go to the Halifax and which are 'passed over' to another company.

You were declined by the Halifax Mainstream underwriting, however were accepted by Birmingham Midshires. You cannot make the comparison with the monthly payments being £100 more and use this as grounds for a complaint. You cannot compare monthly payments of a mortgage you have been accepted for against one that you cannot have. Whatever the Halifax rate/payments would be is irrelevant as it is not available to you.

I'm afraid you have no grounds for any complaint at all.

If you don't like the offer made by the Birmingham Midshires no one is forcing you to take it, simply try another lender or adviser.

regularsaver1

It is natural that if you fail a Halifax credit score they offer you Birmingham Midshires route - there are even leaflets saying so

TangentMan

The HBOS group of companies has numerous parts. The core, Halifax plays in the mainstream mortgage market and shifts boxes on the high street. Its other brands do different things (somre more specialised). BM Solutions, formerly Birmingham Mishires Building society, has been removed from the mainstream box shifter route and now plays in a more "off prime" lending area with its own lending policy.

Which is why the Halifax advistor advised you to see their off prime company (seems natural) (after all what Halifax did was confirm another mainstream lender's findings when NR turned you down.

I can't see what you can complain about.

The reason you are paying more with BM is because you are deemed a higher risk (not mainstream) and therefore not only is the lender taking a higher risk, they are taking more hedging and insurance cover on that risk.

Think of it like a Skoda and a Volkswagon. All part of the same group and indeed share 80% of the same parts. But you tend to find Skodas and VWs in different sectors of the market.

BarmyBubba

Thanks for the replies. I was probably being naive in my original post, but as a young person and FTB and not properly understanding the whole thing I found it a bit odd how the Halifax would not entertain me, but BM would even though part of the same group.

As I need my own place I suppose I am just going to have to grin and bear the 6.5% fixed rate for the first two years and then look at finding a cheaper mortgage after that.

AndrewSmith

BarmyBubba wrote:

Thanks for the replies. I was probably being naive in my original post, but as a young person and FTB and not properly understanding the whole thing I found it a bit odd how the Halifax would not entertain me, but BM would even though part of the same group.

As I need my own place I suppose I am just going to have to grin and bear the 6.5% fixed rate for the first two years and then look at finding a cheaper mortgage after that.

6.5% does seem a little on the high side to me.

Have you looked at other options?

Andy

BarmyBubba

Have tried a few things and banks and BM are the only one I can find who will give me a mortgage. They were trying to fix me for 5 years, but I opted for the 2. Are there any other banks you could recommend that are likely to lend to a supposed high risk FTB?