First Direct offset - frustrating adviser interview

WoollyMan

I'm looking to apply for an Offset mortgage with First Direct, as a re-mortgage from another bank. I had my 90-minute interview with their mortgage adviser yesterday.

We're looking to borrow £121k on a house worth £310k (LTV 39%), with joint gross income of about £87k. No dependants or other exceptional outgoings, so all in all I would hope we would be regarded as a reasonable risk.

I found the conversation quite frustrating at times:

There was a lot of focus on why I was applying for an interest-only mortgage, whereas as far as I am concerned I am applying for a flexible combined product where I will gradually accumulate savings that will eventually match the mortgage. The adviser said he wasn't able to take into account the offset element, which seems just bizarre.

And I was asked why would I want a 14-year term if I can afford to pay off more quickly - to me this is a false question for this type of offset product with no early repayment charge (outside the initial period), as if I have additional resources I may well be saving more, but don't want to tie myself down to a faster repayment when neither I nor they know what my circumstances will be in 13 years. If all goes well (or doesn't go well for parents/parents-in-law and we inherit money) then I do expect to be able to pay off in a shorter period - but surely the bank would rather I took longer and paid them more interest?

And I was asked why would I want to borrow £121k when I have £10k in cash savings (plus other forms of savings and investments), when surely anyone offering an offset mortgage knows that a key selling point of the product is that I want my cash savings to remain available to me but reducing the interest payments, and while the £10k is offset then the net cost to me in interest payments is the same as it would be had I borrowed only £111k.

Am I missing something here? Isn't the bank's job to decide whether I present an acceptable risk and thus whether to form a contract with me? If I am a good enough risk as I propose the contract to them, then it is irrelevant whether I might be a better risk if I cashed in my Premium Bonds, for instance.

Any thoughts? How should I deal with these issues if and when the paperwork arrives?

Thrugelmir

Lenders can sell to who they wish. Just like any business. Perhaps the concern for the bank is that you won't be a profitable enough customer to trade with.

amnblog

The bank has to give you 'advice' and their mortgage adviser needs to go through his 'checklist' of questions.


This is not about you and your circumstances - it's not even about 'advice' - it's about regulation and process.


When the paperwork arrives all you can do is complete it fully and honestly and hope it fits.

WoollyMan

Thanks for your thoughts.

@Thrugelmir - of course, and that's perfectly reasonable. I'm not sure how ignoring the offset element of the product and how I might use that will best achieve that objective, though.

@amnblog - I think you've hit the nail on the head. And if the adviser isn't permitted to take into account the offset element of an offset mortgage, it isn't clear how balanced the resultant advice will be. We will have to see.

getmore4less

WoollyMan wrote: »

.......There was a lot of focus on why I was applying for an interest-only mortgage......

"Because you don't offer offset products on a repayment basis".

[mumble]Barclays and other lender do perhaps I should go to them[/mumble]

stattman

I too had a long interview with First Direct, but as with anything, patience got me through and in the end I couldn't really fault their overall objective with ensuring the product was fit-for-purpose

uhappyy

And if the adviser isn't permitted to take into account the offset element of an offset mortgage, it isn't clear how balanced the resultant advice will be. We will have to see.???

kingstreet

The offset is a facility you can use, or not.

A lender can't afford to accept your word for it that you'll stick half the value of the mortgage in the savings account on day one.

The mortgage has to be approached like any other in terms of affordability and repayment method.

Hence the questions are the same for every kind of borrower.

sebtomato

I was asked some very similar questions by First Direct when I applied for an offset mortgage a few years ago, and I was probably presenting a risk profile at least as low as yours. I think I even had two very long phone calls with them, answering many questions, including very specific queries on lines of my bank statements, or pay slip.

I took the mortgage over 20 years, and they also asked why. Mortgage had no initial discount period, and no penalties for early repayments.
I said that I might as well take a long mortgage, in case I have financial troubles in the future, and therefore need a longer repayment window. That answer satisfied them.

Basically, their offset mortgage is interest only, so I guess they have to go through some due dilligence, even for low risks applications. First Direct/HSBC have some of the best rates around, but are known to be picky with the applicants.

Interestingly, they just sent me a letter today advertising their newer mortgages, and mentioning that they were waiving fees to existing customers who wanted to remortage or increase the size of their mortgage

JustTakeAllMyMoney

WoollyMan wrote: »

I'm looking to apply for an Offset mortgage with First Direct, as a re-mortgage from another bank. I had my 90-minute interview with their mortgage adviser yesterday.

We're looking to borrow £121k on a house worth £310k (LTV 39%), with joint gross income of about £87k. No dependants or other exceptional outgoings, so all in all I would hope we would be regarded as a reasonable risk.

I found the conversation quite frustrating at times:

There was a lot of focus on why I was applying for an interest-only mortgage, whereas as far as I am concerned I am applying for a flexible combined product where I will gradually accumulate savings that will eventually match the mortgage. The adviser said he wasn't able to take into account the offset element, which seems just bizarre.

And I was asked why would I want a 14-year term if I can afford to pay off more quickly - to me this is a false question for this type of offset product with no early repayment charge (outside the initial period), as if I have additional resources I may well be saving more, but don't want to tie myself down to a faster repayment when neither I nor they know what my circumstances will be in 13 years. If all goes well (or doesn't go well for parents/parents-in-law and we inherit money) then I do expect to be able to pay off in a shorter period - but surely the bank would rather I took longer and paid them more interest?

And I was asked why would I want to borrow £121k when I have £10k in cash savings (plus other forms of savings and investments), when surely anyone offering an offset mortgage knows that a key selling point of the product is that I want my cash savings to remain available to me but reducing the interest payments, and while the £10k is offset then the net cost to me in interest payments is the same as it would be had I borrowed only £111k.

Am I missing something here? Isn't the bank's job to decide whether I present an acceptable risk and thus whether to form a contract with me? If I am a good enough risk as I propose the contract to them, then it is irrelevant whether I might be a better risk if I cashed in my Premium Bonds, for instance.

Any thoughts? How should I deal with these issues if and when the paperwork arrives?

I recently had the same interview for the same product and how you describe things is near enough a carbon copy of how it went for me and how I felt after it, my interview was 2.5hrs and left me exhausted. I too felt confused about the question asked as it contradicated the benefits they sell the offset product on.

If FD read these threads they need to reconsider there approach with offset questioning / refine it, for me the intervoew was enough to want to ditch them as my bank of choice for the last 10 years.

redcar_2

Can I add a me too to this.

It seems as if you are not just allowed to say you want an offset mortgage but need to present a situation where an offset mortgage is bound to be the right one for you.

Just wanting the 'offset' nature of a mortgage is not enough, and many of the reasons I gave I was told were not valid as they are just features of the mortgage. Ditto the balance between fees and interest rate you have to justify this by predicting your future cash flow.

Seems like you aren't allowed to be a grown-up and say just give me this product I know what I want. These new regs seem to have turned it all into a game of needing to know the right answers as well as being able to afford it obviously.