First Direct - Just How Picky Are They?

leccyblue

Hi All,

We're just starting the process of applying for a mortgage via First Direct. We've done the fact find telephone call and have been told that we meet their criteria in terms of income, affordability etc. Received the printed application form in the post yesterday to send away. However, I keep reading everywhere about how picky they are. I've read things like "we were declined because they looked at our statements and we have no money left at the end of the month" etc.

About us...

We have a joint income of £56k, and are looking to borrow £105k on a £125k property with a £20k deposit over 25 years. I have had credit card debt in the past (around £8k at it's highest) but paid this off 3 years ago. I've never, ever missed a payment and have a clean credit record. Since then, we have taken advantage of (my) credit cards 0% purchases/transfers for household improvements and two new (second hand cars), but again these have all been paid off. Highest balance during this time approx £6k. Finished paying this off in December 2012. There is £200 sat on a card at the moment (deposit for a holiday) which will be paid off at payday. My wife doesn't have any credit cards in her name. We don't have any credit commitments except car insurance, and mobile phones, if they count these.

We do "spend" practically every penny we earn each month - that isn't because we are skint, it's because we have been saving for the last two years for our deposit. Last month for example, we put £1,700 of our take home pay into our ISAs. We prefer to put what we think we can save this month, in our savings at the beginning of the month, so it's committed. Because of this, if we have any unexpected expenses (car repairs for example in August) we have been into our (agreed, interest free) overdraft. Purely because it's easier to do this, no interest, and it gets paid 'automatically' when we are paid. The most we have been into this over the last three months is £300.

The mortgage is very affordable for us - monthly repayments are well within budget, and in fact we plan to overpay and pay a total of £1000 a month to accelerate the term, and we'll still have £700 or so disposable after ALL our bills, shopping, expenses etc to save.

I may be worrying unnecessarily here as "on paper" I know we are low risk. Does anyone here have any real world experience with their First Direct application to share? We'd really like to be with First Direct but they are quoting 6-8 weeks and if there is a good chance they are picky and will say no, we may be better rethinking. I'm worried they'll look at our bank statements, see that all money in the last 3 months has been "accounted for" and not take into account that a significant proportion of this has been going into our savings...

Thrugelmir

Don't read anything to other peoples experiences. The vast majority of mortgage applications are processed without issue. Lenders are advancing thousands of pounds. So need to have trust in the potential borrower. There's where being "picky" as you put it comes into play. As a credit record combined with other personal data, allows a lender to pidgeon hole fairly accurately.

Georgesmum79

I have banked with FD for over ten years, and have currently a small mortgage with them. As I am their customer, it is not problem me getting a mortgage, loan, credit card from them, as well as I pass their affordability criteria.

I am a but curious that you could get, what I calculate, a 85% mortgage from them, as I thought their limit is 70%?

They are quite picky because they don't want high-risk customers: because of this they can offer slightly better deals than other large banks. My new mortgage is jointly with my other half, and as he is not a FD customer, they did look at a lot of his things, including a phonecall at work to confirm that he is employed!

They might ask why at one point you have had a high balance on a credit card (if they can see this), and depending on your response, it may or may not be an issue. My other half actually had to buy a cheap car on a credit card, and FD queried this: once we explained that he had to return to the UK at short notice from abroad due to family emergency, this was ok. As FD are my bank, they wanted to know about some of my standing orders, as they thought I was playing maintenance of school fees for children I was hiding from them: turned out that these are regular payments to a dog walker and riding stables, which was ok!

Forgot to say that they 'should' contact you within 48hrs after they receive your application. I would also keep calling them if you are anxious, as they will also look into it there and then if they have your details.

hanvyj

leccyblue wrote: »

Hi All,

We're just starting the process of applying for a mortgage via First Direct. We've done the fact find telephone call and have been told that we meet their criteria in terms of income, affordability etc. Received the printed application form in the post yesterday to send away. However, I keep reading everywhere about how picky they are. I've read things like "we were declined because they looked at our statements and we have no money left at the end of the month" etc.

About us...

We have a joint income of £56k, and are looking to borrow £105k on a £125k property with a £20k deposit over 25 years. I have had credit card debt in the past (around £8k at it's highest) but paid this off 3 years ago. I've never, ever missed a payment and have a clean credit record. Since then, we have taken advantage of (my) credit cards 0% purchases/transfers for household improvements and two new (second hand cars), but again these have all been paid off. Highest balance during this time approx £6k. Finished paying this off in December 2012. There is £200 sat on a card at the moment (deposit for a holiday) which will be paid off at payday. My wife doesn't have any credit cards in her name. We don't have any credit commitments except car insurance, and mobile phones, if they count these.

We do "spend" practically every penny we earn each month - that isn't because we are skint, it's because we have been saving for the last two years for our deposit. Last month for example, we put £1,700 of our take home pay into our ISAs. We prefer to put what we think we can save this month, in our savings at the beginning of the month, so it's committed. Because of this, if we have any unexpected expenses (car repairs for example in August) we have been into our (agreed, interest free) overdraft. Purely because it's easier to do this, no interest, and it gets paid 'automatically' when we are paid. The most we have been into this over the last three months is £300.

The mortgage is very affordable for us - monthly repayments are well within budget, and in fact we plan to overpay and pay a total of £1000 a month to accelerate the term, and we'll still have £700 or so disposable after ALL our bills, shopping, expenses etc to save.

I may be worrying unnecessarily here as "on paper" I know we are low risk. Does anyone here have any real world experience with their First Direct application to share? We'd really like to be with First Direct but they are quoting 6-8 weeks and if there is a good chance they are picky and will say no, we may be better rethinking. I'm worried they'll look at our bank statements, see that all money in the last 3 months has been "accounted for" and not take into account that a significant proportion of this has been going into our savings...

I don't think you will have a problem. Our application was accepted and we frequently pop into our overdraft for similar reasons. The only thing we haven't had is a large debt in the past - but we did have a credit card that we pay off every month.

Given that you are putting so much into savings each month, and that's why you are 'on the edge' of your earnings I don't think they are going to refuse you! A lot of people do this so they aren't tempted to spend their savings - it's what we do.

hanvyj

Georgesmum79 wrote: »

I have banked with FD for over ten years, and have currently a small mortgage with them. As I am their customer, it is not problem me getting a mortgage, loan, credit card from them, as well as I pass their affordability criteria.

I am a but curious that you could get, what I calculate, a 85% mortgage from them, as I thought their limit is 70%?

They are quite picky because they don't want high-risk customers: because of this they can offer slightly better deals than other large banks. My new mortgage is jointly with my other half, and as he is not a FD customer, they did look at a lot of his things, including a phonecall at work to confirm that he is employed!

They might ask why at one point you have had a high balance on a credit card (if they can see this), and depending on your response, it may or may not be an issue. My other half actually had to buy a cheap car on a credit card, and FD queried this: once we explained that he had to return to the UK at short notice from abroad due to family emergency, this was ok. As FD are my bank, they wanted to know about some of my standing orders, as they thought I was playing maintenance of school fees for children I was hiding from them: turned out that these are regular payments to a dog walker and riding stables, which was ok!

Forgot to say that they 'should' contact you within 48hrs after they receive your application. I would also keep calling them if you are anxious, as they will also look into it there and then if they have your details.

They do lend up to 90%! (That's what we just got approved) But they don't let you borrow as much as some others.

leccyblue

Thank you both for your replies! The cards don't concern me too much, as I'm pretty sure they'll only see current balances, along with my (immaculate) repayment history. As I only have £200 on one, which will be repaid on pay day, I'm sure that will be fine.

The thing that concerned me the most was that someone had said they were rejected because they spent/used all of their income each month, so basically bank balance = £0 at the end of each month. Like us, it was becuase they were transferring as much as possible to fund their deposit. This, and because of this meaning we have once or twice been into our agreed, intereset free OD concern me. We don't want to go through 8 weeks of waiting, only for a "no" and have to start the process again with another lender.

I guess what I was hoping for was for someone to come along and say, don't worry - we were in the same/similar position - and they accepted us!

In terms of LTV, they told me on the phone they would go up to 90%. Ours comes in at 84%.

The mortgage is more than affordable - they'd lend us up to £220k according to their website. Combined with no debts means that we have a lot of disposable income. It's just the worry that it could fall at the last hurdle because of what we thought were good savings habits!

Georgesmum79

leccyblue wrote: »

The thing that concerned me the most was that someone had said they were rejected because they spent/used all of their income each month, so basically bank balance = £0 at the end of each month.
QUOTE]


This would indicate that they only had just about enough to make ends meet, and clearly could not afford a mortgage. If you have nothing left at the end of the month because you are saving, then clearly you can afford the mortgage and afford to live.


I didn't know they went as high as 90%!! Maybe their good rates are capped to 60% LTV, because those are the only ones I have looked at.

leccyblue

hanvyj wrote: »

I don't think you will have a problem. Our application was accepted and we frequently pop into our overdraft for similar reasons. The only thing we haven't had is a large debt in the past - but we did have a credit card that we pay off every month.

Given that you are putting so much into savings each month, and that's why you are 'on the edge' of your earnings I don't think they are going to refuse you! A lot of people do this so they aren't tempted to spend their savings - it's what we do.

Thanks hanvyj; This I find reassuring! I know I probably just need to stop worrying but I know how disappointed we'd be if we're declined after 8 weeks of waiting! We can prove where the money is going with ISA statements it's just whether they'd allow you to do so or just flat out decline.

leccyblue

Georgesmum79 wrote: »

This would indicate that they only had just about enough to make ends meet, and clearly could not afford a mortgage. If you have nothing left at the end of the month because you are saving, then clearly you can afford the mortgage and afford to live.

They were in the same position as us though. They were at £0 at the end of each month because they were transferring all surplus to their savings, to fund their deposit, as we do. Apparently FD didn't like that! Only something I've read on a forum somewhere though so who knows?!

Georgesmum79

leccyblue wrote: »

They were in the same position as us though. They were at £0 at the end of each month because they were transferring all surplus to their savings, to fund their deposit, as we do. Apparently FD didn't like that! Only something I've read on a forum somewhere though so who knows?!

Nah, I don't buy that, sorry! People don't like to admit to not getting an offer and will find reasons. There must be more reason than just saving!

Btw, if you have waited for 8 weeks, I would give them a call. Mine was done and dusted in about three weeks!

leccyblue

Georgesmum79 wrote: »

Nah, I don't buy that, sorry! People don't like to admit to not getting an offer and will find reasons. There must be more reason than just saving!

Btw, if you have waited for 8 weeks, I would give them a call. Mine was done and dusted in about three weeks!

You're probably right! People can write anything on the Internet afterall. No, we haven't waited 8 weeks - we've only just received the printed application forms. But we have been quoted 6-8 weeks by them. I just don't want us to go through 8 weeks of waiting for a decline, if it's likely they don't like people using their ODs and transferring all spare income to savings.