First Direct - did they make an error with the application?

SlimJ_GBR

Hi,

Had an offer on a house accepted for £280k, we only need to borrow £140k as FTB's so are looking at the lowest rate possible with unlimited over payments to ensure the mortgage can be cleared ASAP. I've banked with FD for over a year and they have a 1.79% lifetime tracker at the moment, perfect.

We did the (phone) application last night with FD after getting an initial approval (before we did the application) for up to £250k with them... we also have an AIP for £293k with HSBC as we were going to go with them before the fees doubled in price and we discovered FD had a better deal.

Anyway, salary between us was given as £63k, I'm self employed but have all accounts so they said there was no problem (my average over 3 years is much lower than I earn now but that's neither here or there for the application). Partner is employed in secure job. Both in our mid 30's.

We have no finance, no debt, never missed a credit card payment and clear them every month, our out goings are very low, no kids or plans to have kids, and save well over £2k per month between us currently. We could move in to this new place and after bills (excluding mortgage) still have over £3.5k cash per month based on current earnings. We basically run a tight ship, live frugally and generally don't like to have any debt. We aimed to clear the mortgage in well under 10 years.

The application was processed and they approved us for £49k! I was stunned, I know MMR would have an effect but as they had taken most of the details on the previous call and said we could borrow up to £250k it has left me feeling like they had made an error - I'd honestly expected around £200k max. Even £49k at 8% over 25 years is only around £400p/m, so well within affordability.

I confirmed earnings and a few things over the phone but this seemed correct.

Does this look like there's been an error in the application? Can we investigate this application to ensure details are correct?

We have made another appt with HSBC as they are our next best option, the adviser on the phone seems to think FD have done something incorrectly and that we shouldn't have any problems getting the funds.

Some words of advice are needed to help with this confusion!

Thanks

Thrugelmir

SlimJ_GBR wrote: »

(my average over 3 years is much lower than I earn now but that's neither here or there for the application).

From the lenders perspective it is. Unless your income is generated through contractual arrangements which guarantees it.

FD are a subsidiary of HSBC so will have similar lending criteria.

marathonic

You quote savings of over £2,000 per month. Did you fill this in as your indended savings after completion? I've heard of them deducting this for affordability purposes so you should give a very low figure, or a £0, for intending savings when completing the application.

SlimJ_GBR

Thrugelmir wrote: »

From the lenders perspective it is. Unless your income is generated through contractual arrangements which guarantees it.

Yes I understand, I mean my three years books are lower than I'm due to earn in this current tax year. One year I was off work for a short while with a broken leg, this brought my average down.

Earnings for 2014-15 are not taken in to account for the application unfortunately.

SlimJ_GBR

marathonic wrote: »

You quote savings of over £2,000 per month. Did you fill this in as your indended savings after completion? I've heard of them deducting this for affordability purposes so you should give a very low figure, or a £0, for intending savings when completing the application.

This could be a reason, we both said we currently save over £1000 per month each, but this was not a regular amount saved, just what we didn't spend at the end of the month. After completion we still intend to save but we'll mainly be overpaying the mortgage.

When I spoke to the adviser on the phone she did say she tried the application with £0 for regular savings but this didn't change anything - This I'd need to clarify with her.

We're due to have a call with her on Sunday just to clarify the application as we feel something is incorrect.