Re-mortgage with First Direct - payments

Arthur_Wellesley

Hi,

I recently re-mortgaged with First Direct. I applied for a 5 year fixed at 2.69%, on the basis of £70,000 over 12 years. The offer was calculated at 60 payments of £570.14 (2.69%) followed by 84 payments at £590.17 (their standard variable, then at 3.69%). I was drawn to First Direct, partly 'cos I bank with them and also because of unlimited overpayment, which I'll be taking full advantage of.

By the time my mortgage was processed, the amount owed had reduced to £69,081.61. I pushed this figure through various mortgage calculators and reckoned this should reduce the initial monthly payments by £8.28 to £561.86. However, following a number of conversations with First Direct and they re-calculate the initial monthly payment reducing by just £2.17 to £567.97.

I know the difference is slight, but I'm sticking to a plan to become mortgage free through overpayments, and every £ counts. I'd also quite like to understand why it's different. First Direct's explanation is that they recalculate over the life-time of the mortgage, and I've tried to explain that if I applied afresh of the basis of £69,081 that the payments would be akin to my calculation.

Any thoughts? Am I losing out on the basis of their payment calculation.

Thanks
KH

kingstreet

How much did you actually borrow on completion day, £70,000 or £69,081?

Arthur_Wellesley

My new mortgage AC with First Direct was debited with £69,081.61.

They didn't contact me with a revised payment amount so I phoned and asked to be advised of both the new payment and when first payment was due. When asked why this hadn't been done/communicated, they (verbally) said that it's assumed that I would draw on the balance upto the amount of the original application.

KH

kingstreet

I'm confused.

The balance of your existing mortgage was £69,081, but you obtained a mortgage offer for £70,000?

Did you obtain a revised offer close to completion, or did the solicitor handling the transaction pay the difference over to you?

If you applied for a mortgage of £70,000, you should have a mortgage for £70,000, unless a revised offer was issued?

Please clarify.

Arthur_Wellesley

No revised mortgage offer received. The sequence of events was ...

20/6/13: Mortgage offer received, on the basis of £70,000 (as per my application). First Direct instruct enact to act for them.

8/7/13: Existing lender sends me a redemption statement, for £68,997, plus interest of £7.61 per day after 8/7/13.

I phoned First Direct to advise of reduced amount required. Told no need to adjust application as it's less than £5K difference.

18/7/13: First Direct sent a one-page 'Advice of Debit', saying the my account has been debited with £69,081.61.

19/7/13 Enact completed the remortgage. The completion statement says:
Advance Amount £70,000
Money Received from First Direct £69,081.61
Mortgage Redemption £69,081.61
Balance Remaining £0
Fees £0
Dispursements £0
Balance £0

12/8/13: Having received no further communication from First Direct, I phoned seeking clarification on revised payment amount and date of first payment.

kingstreet

I understand.

So no revised offer was issued.

Did the lender issue a revised key facts illustration reflecting the reduction in the amount being borrowed?

Arthur_Wellesley

No. When I phoned to advise of revised amount, I was told no need to adjust anything as it was within £5K of amount applied for.

kingstreet

AFAIK regardless of the amount concerned, a new KFI should be issued reflecting the change in the mortgage amount.

We have to do that and confirm in writing the reason for the change. It's not beyond the realms of possibility that a lender gets away with not complying with regulation, but that should not be the case IMHO.

I'm sorry, Your Grace, but there's no other possible conclusion to this, other than "speak to the lender," I'm afraid.