First direct + Santander: my plan, practicalities

redonion

rb10 wrote: »

If it was me, I wouldn't make any applications for credit (this includes current accounts) in the six months prior to taking out a mortgage.

Sigh. I hadn't considered the need to send smoke-signals to lenders. I'm in the process of checking my file now... I guess even if my rating is good, it's not an all-or-nothing thing: an incrementally better rating ups the odds of getting a better mortgage deal, which is going to be worth a lot more to me than 1% on my savings for a year?

Thanks.

redonion

YorkshireBoy wrote: »

The Santander account requires a minimum of two DDs set up on it in order to qualify for the 3% credit interest. There's also a £2 per month fee, which may be offset by the switching of utility DDs, which will affect the return (albeit in a small way).

The First Direct account will need 2 DDs or SOs (or a combination) switching to it in order to obtain the £125 incentive.

Are you OK with jumping through a few hoops?

I think I only have two SOs and no DDs right now. Creating new DDs or SOs is probably a hoop too far for this, especially considering the mortgage angle.

Edited: actually I think I must have at least three or four, but still...

redonion

dalesrider wrote: »

But opening a 1st account won't stop you getting a mortgage with FD.

I wouldn't want to limit myself to an FD mortgage, though.

redonion

innovate wrote: »

The SO will be set up by FD on the day you open the account, or the day after. Your first payment will be taken then, and the remaining ones for 11 months thereafter on the same day

General: you may have your SOs too close to the money going into your FD. I would leave at least 4 working days between money being paid in and taking some out automatically.

I see. I'll file that info away, though I'm having second thoughts about this plan due to the credit score issue.

You can indeed. You can also do it online, thus saving phone costs, and it will probably take less time to do it that way.

I understand that, but I choose not to for other reasons.

Why leave any money in FD when you get no interest for it? Don't you have Vantage on your Lloyds account?

Nope -- because I've been procrastinating about money in general. Hmm, looks like I could get 3% up to £5000. I hadn't realised!

The only thing there is that I'd like to separate it from the hurly-burly of my current account. Will opening a second Lloyds account hurt my credit score for mortgage purposes, do you think?

You need to keep an eye on the Santander interest all the time. It is variable and not guaranteed for any length of time.

Noted. I suppose 3 months is a reasonable "tickler" to put in your calendar to check up on it? What's the easiest way to keep track? Do you just look on the bank websites? (often a pretty tiresome exercise in my experience)

redonion

noh wrote: »

Has the op already opened three Lloyds classic current accounts with Vantage filled them with between £3k and £5k and is moving £1k a month between them.?
Therefore earning 3% on the balance.

He has not, mostly because he's an idiot for not doing this earlier. However, what's likely the credit score impact of that for mortgage purposes, I wonder?

Also, that's still going to leave me with lots of cash to keep somewhere at a reasonable rate -- but I guess a post office account is a reasonable baseline choice there.

Gromitt

redonion wrote: »

The only thing there is that I'd like to separate it from the hurly-burly of my current account. Will opening a second Lloyds account hurt my credit score for mortgage purposes, do you think?

I wouldn't have thought so, but each additional account will be a 'hard search', so others will indeed see it as a full credit search. After a few months, they won't care so much though, so unless your mortgage application is imminent, I wouldn't worry about it.

What's the easiest way to keep track?

If it changes, someone will post about it on here, and it'll be discussed at length.

Also, that's still going to leave me with lots of cash to keep somewhere at a reasonable rate -- but I guess a post office account is a reasonable baseline choice there.

Don't forget the highest amount from the post office is 2.67% in a few days, even if you opened it before the advertised rate drop.

redonion

innovate wrote: »

Making FD the primary account looks like the worst of the scenarios for me.

If I were the OP, I would

1. keep my money going into Lloyds (having ascertained I have Vantage)
2. move all my DDs to Santander (to get cashback and to have all DDs in one place)
3. send £300 a month from Lloyds to FD, and enough for the DDs (and the minimum £500/mth) to Santander
4. if Lloyds account goes over £5K, syphon some more into Santander (assuming that one is still below £20K)
5. if Santander goes over £20K, syphon excess back into Lloyds. If necessary, open one or two more Vantage accounts, so there's space for another £10K

Think 3. doesn't work unless I have an FD account with more than that going into it though. Plus the credit rating issue.

RB10 is absolutely right, the Lloyds account would look good on the mortgage application. And I think the OP said they have an overdraft there which they don't want to lose.

The overdraft isn't a priority, but I don't want to throw it away without cause.

I find myself wondering again whether I get saddled with a monthly if I ever lost my job and 1000 a month stops going in. I read elsewhere here that the first direct monthly account fee is waived if you have e.g. a savings account with them, so that isn't the drawback I'd thought. In the LTSB case I don't know whether you have to pay a fee, or just lose the Vantage status and revert back to "Classic".

innovate

redonion wrote: »

Will opening a second Lloyds account hurt my credit score for mortgage purposes, do you think?

You could play about with the MSE credit checker which you find on this page: http://www.moneysavingexpert.com/loans/credit-rating-credit-score. Also may be ask a mortgage broker for their views. I have no useful knowledge on it, it's decades since I last applied for a mortgage.

Banks will do a full check when you apply for a current account but a lot more important is how much credit you have available. With the FD acct, you will automatically get £250 overdraft, and Santander gave me an un-requested overdraft of several K (may be I forgot to tick a "no thanks" box during the application). Lloyds don't automatically give you an overdraft.

redonion wrote: »

I suppose 3 months is a reasonable "tickler" to put in your calendar to check up on it? What's the easiest way to keep track? Do you just look on the bank websites?

Interest rates can - and do - drop very fast. Look here on the forum, go to the bank's website. Also, banks will normally write to you when they drop the interest rate.

redonion wrote: »

Think 3. doesn't work unless I have an FD account with more than that going into it though. Plus the credit rating issue.

Of course it does work. You only need the £1.5K going in if you want to bag the £125 signup bonus. You can reduce this to £300 as soon as you have bagged the £125. Also, you do not have to pay £1.5K in in a single transaction - - for instance, you could make 15 payments of [the same] £100 to achieve £1.5K, Just has to add up to 1.5K a month. And set up a normal savings account to save the £10 account fee.

redonion wrote: »

I find myself wondering again whether I get saddled with a monthly if I ever lost my job and 1000 a month stops going in.

See above, it does not have to be £1K in one go. It just has to add up to £1K a month. Also, you could use £1K from your savings held in current account and just FP them round all the required places. This takes less than half an hour to do once a month manually - - if you get rid of what seems to, frankly, be a somewhat irrational fear of using Internet banking.

redonion wrote: »

In the LTSB case I don't know whether you have to pay a fee, or just lose the Vantage status and revert back to "Classic".

You don't have to pay a fee and you do not lose your Vantage status. You just don't get any interest for the month where you don't pay £1K in.

YorkshireBoy

Since you're already a LTSB current account holder the absolute minimum you should do for your money is to open 2 more Classic Vantage accounts and put Vantage on your existing account. Fill them up with £5K each (total £15K) and set up some SOs to shuffle the requisite £1K around each month.

Then, once a month, log in (or, since you seem to have a complex about online banking, visit an ATM) and syphon off the £10 or so interest from each account and put it somewhere else.

So long as these additional accounts don't have overdraft facilities I wouldn't worry about their impact on a mortgage application. Even if the underwriters pick up on the 'recent' searches you simply appeal any decision that goes against you by telling the truth...ie you've opened them as savings accounts. Simple!

pmduk

redonion wrote: »

And whether my login data is private is not something completely under my control, in practice.

Well it should be.

redonion wrote: »

It's not so much the risk of fraud itself that I find most problematic, as the attitude of financial institutions in response, which seems to tend to be "it must be the customer's fault, and their responsibility, because our systems are perfect".

Few banks take that attitude for long, as when challenged, particularly by the FOS, they have to substantiate their claim.

Although not keeping your login data and passwords private will cause you problems with every bank I've ever dealt with.