first direct mortgage difficulties

neverdespairgirl

We are looking to buy a flat which costs £690,000. We will put down a deposit of £245k, so need a mortgage of £445k. We have separately got £40k for fees and stamp duty, and £50k for necessary work on the flat before we move in. We will also then have £10k rainy day funds and £60 in shares (ISAs, mostly).

We had an agreement in principle from Lloyds (with whom we both bank) that they would lend us up to £600k, and they offered a rate of 4.5% fixed for 5 years.

We are both barristers, both therefore self-employed. My earnings have remained fairly constant over the last few years (a few grand more each year) but my partner's have jumped because he moved Chambers - his last set of accounts show a taxable income of more than double that he earned 3 years ago.

When our offer was accepted, we found that Lloyds had bounced their rates up a lot. We looked elsewhere, and found that both HSBC and First Direct offered much better fixed deals for 5 years.

I rang HSBC, and asked how they calculated earnings. They said for the self-employed, they took an average of the last 3 years' accounts.

I rang First Direct, spent over an hour on the phone to them, and explained that there had been a jump in earnings. The woman I spoke to put me on hold and went to speak to someone else. She then came back and said that they would take into account our last year's accounts and a letter from each of our senior clerks, counter-signed by our respective heads of Chambers, setting out fee income over the last 3 years and expected fee income over the past two.

We applied, paid our fees, put in all the documents.

Today I had a call from the underwriters, saying that they would take our income as the past 3 years average. This is different from what I discussed at some length with the initial woman, and a pain in the neck.

She suggested we get our accountants to do our accounts so far for this tax year, with a projection of our likely taxable income for this financial year based on the story so far.

Am I right to feel messed about? Anything we can do about it?

GMS

First Direct may not be the best rate for you.

Are you an existing homeowner or First Time Buyer?

First Direct are very picky so may well give you the run around.

Have you spoken to a broker? May be worth a chat.

If First Direct want additional information then you will need to supply it to them.

neverdespairgirl

We are First Time Buyers. First Direct's rate is 4.2% fixed for 5 years.

GMS

Good rate that but it is an old one. Hope they honour it.

Unfortunately you will need to jump through all of the hoops they require you to.

Rates slightly higher with other lenders who may not be so picky with the income figures. Obviously I could not say with any degree of certainty as I do not know the details.

Hope you get the right result with First Direct. Fantastic bank (I bank with them) but not straight forward as a lender.

maninthestreet

To be fair to FD, they are taking into account your earnings in the last year, just not in the way you want them to do.

originalmiscellany

I agree with FD. Think they're a brilliant bank, really efficient etc. I think we were fortunate to get in with them last year, and getting the MIP approved 5 months in advance, plus had all paperwork ready etc. But we're both public sector workers so it's not easy to compare us with you.

If you do get accepted, I genuinely think they're a brilliant bank, and haven't stopped singing their praises since we joined.

neverdespairgirl

GMS wrote: »

Good rate that but it is an old one. Hope they honour it.

We've paid the fee, so they said they would honour it for up to 6 months.

kingstreet

Don't HSBC and First Direct have the same underwriting policies? With FD being an HSBC subsidiary I wouldn't expect a lot of difference.

I still can't find this 4.29% five year fix we're hearing about. Anyone got a link to it on the FD site?

uzubairu

We found First Direct to be extremely thorough when we remortgaged with them last August.

We only wanted 1.25x joint income and less than 50% LTV (no loans or credit card debt) so we thought it would be a breeze, but we still had to answer loads of questions and at times, it felt like we were not going to get approval.
I even had to explain what certain cheques drawn on my personal account were for, and why were there large ATM withdrawals at certain times of the month (and what the money had been used for).

My OH had to answer several detailed questions too, over several phones calls with FD personnel and we had our fingers crossed the whole time.
We had to fax certain documents twice because they claimed that they hadn't received them, but since they were the ones lending us the money, we just did what they asked and hoped for the best.

I hope it works out well for you both, as we have been very impressed with the service we received from them.
We ended up moving our bill payment account across to them as well as the mortgage.

Good luck!

neverdespairgirl

kingstreet wrote: »

Don't HSBC and First Direct have the same underwriting policies? With FD being an HSBC subsidiary I wouldn't expect a lot of difference.

I still can't find this 4.29% five year fix we're hearing about. Anyone got a link to it on the FD site?

I think they've now changed it from 4.29% to 4.59%.

Imelda

We have got an FD mortgage and so feel your pain regarding the hoop jumping you have to go through . My husband had just changed jobs when we applied so at first they turned us down as he did not have sufficient pay slips for his current job. I am self employed, but only since 2009 so we didn't even bother putting my income on the mortgage (we budget on the basis of his salary anyway). It took a bit of wrangling and a LOT of faxing but they were able to bend the rules (we ended up sending a copy of my DH's employment contract- that was the level of detail they wanted). I would suggest that they have disregarded your initial conversation and would ask that it is looked at again, the mortgage centre is the same as the HSBC one and you never get the same person twice so I would argue it.

Good luck!