Appealing mortgage lender's decision for an existing customer - First Direct

Gingerlou77

I'm about to write a lengthy letter to First Direct, my lender of 2yrs to appeal a decision on additional mortgage lending - am I totally wasting my time??

Some additionl borrowing was agreed in principle, we have sufficient equity to stay within the loan to value limits and wanted to borrow additional money to consolidate some personal loans and a credit card, and replace our decrepid bathroom and kitchen.

THe amount we requested was the amount agreed in principle, but when referred to the underwriters, refused on the grounds of 'affordability'. This is non-sensical as our monthly outgoings would actually go down, by more than a half, when comparing our existing loan commitments. Ie the additional borrowing, as it would be a new mortgage account to run along side our existing one, would be less than half our current monthly loan commitments, AND allow us to carry out the essential upgrades to our house.

When I tried to press the adviser further on this, he said he could not discuss it, and just that we did not meet the affordability criteria. . We've never defaulted on a mortgage or loan payment in over 7 years of being homeowners and really need to get this money to sort the house out - what can we do?

We can't move the whole mortgage to another lender, as we're on such a good deal with First Direct, tracking at base +1%.

Help - any ideas? Will an appeal letter even be considered?? Is it possible for another lender to take a second charge on the property??

Dave_Ham

First things first, First Direct/HSBC are amongst the most selective lenders out there - search the threads in this forum.

I do not fancy an appeal will be successful, although it cannot cost anything to put your thoughts in writing.

The First Direct answer could be in your question about the rate you are on.. You can get a second charge on the property, although these are currently still working out very expensive...

Good luck

somethingcorporate

Yes, finance providers can put second charges on the property but it maybe at the discretion of your current lender. One of the lenders I have a mortgage with (not FD) charge for the pleasure too.

I see no harm in firing off a letter, whether it will do anything is another question. If nothing else it will make you feel better.

GMS

You could appeal but they seem to have made the decision based on a full review. Unlikely to be successful but worth the cost of a stamp, even after the increase tomorrow!

You may be able to borrow the funds from a second charge lender but rates will be high. That said if the borrowing required is small in comparison to the mortgage at base plus 1% then it may be cheaper to take a second charge loan than refinance elsewhere for the full amount.

Gingerlou77

thanks for the helpful comments - I will send the letter off anyway.... Where do I start about finding a lender that would be willing to lend on a second charge and how much is likely to cost in fees? Are First Direct even likely to agree??

Dave_Ham

Typically a broker would be a decent starting point.

First Direct are highly likely to accept it, cant recall seeing them decline one.

Rates are in around the 7-12% mark depending upon income, credit score, loan to value...

Good luck

GMS

Probably best to speak to a broker.

In theory it makes no difference to FD as they would still have the first charge on the property. However they could still refuse if they choose to.

somethingcorporate

+3 for finding a broker, given it is a little bit specialist. No point in wasting applications or time.

Gingerlou77

I will speak to a broker, thank you. House value currently around £200k, mortgage £147k, income (sole income on joint mortgagees at the moment) £52k - we wanted £26k to do everything we needed - taking it back up to 90% LTV - doable??

Would it be feasble to consider a second mortgage as a short term solution?? I am a stay at home mum, will in 3 years time be a qualified health professionsl (physio) and we will look to move house once I'm back in full-tim employment.... Could we then re-approach FD to get rid of the second mortgage that will be at a high rate - or is this looking messy..??

Dave_Ham

You know what, on the rates provided you are only ever going to want it to be a short term solution.

It will be hard work to get a 2nd charge to 90% LTV, hard work not impossible..

FD would have declined you based upon accruing unsecured debt whilst being on a lower than average mortgage rate..

I may appreciate that being a parent reduces income and increases costs, although banks just look at is black and white. A letter will be a waste of your time now given these parameters..

In years to come when the property market comes back and you are working in new profession, sure FD and you will view the world differently...

Gingerlou77

Dave_Ham wrote: »

You know what, on the rates provided you are only ever going to want it to be a short term solution.

It will be hard work to get a 2nd charge to 90% LTV, hard work not impossible..

FD would have declined you based upon accruing unsecured debt whilst being on a lower than average mortgage rate..

I may appreciate that being a parent reduces income and increases costs, although banks just look at is black and white. A letter will be a waste of your time now given these parameters..

In years to come when the property market comes back and you are working in new profession, sure FD and you will view the world differently...

the thing is, most of the unsecured debt was already in place when we had the mortgage approved initially, although I suppose I had an income then, albeit for only one month of the new mortgage term!! Yes, thanks, I think you're right, I'm probably wasting my time with FD and the cost of a stamp