Mortgage Prisoner - First Direct

JuniorOeuf

I have been with First Direct for over a decade and have been very happy with them....until the last few years.

I have an off-set/interest only mortgage and now their rates are completely uncompetitive in comparison to other providers (roughly 3 times the interest rates of the best suppliers like Scottish Widows).

• I run my own business which has remained profitable during the crisis
• my wife was made redundant and is now working on a consultancy basis (earning more than she did as a permanent employee)
• We have c. £1m equity in our property
• We have never defaulted

Unfortunately - due to the pandemic I am stuck paying an uncompetitive rate because of affordability rules. I cannot move supplier and they will not move me on to a repayment mortgage (where the rates are more competitive) due to affordability.

I suppose my main bugbear is that their offset rates are so uncompetitive.

Someone at the top has obviously decided that customers on offset deals have been getting too much of a good deal for too long and has decided that now is the time to discourage new customers (fair enough) and completely screw over existing customers (pretty low).

Luckily business and revenues are picking up, so hopefully I will be able to show enough income to move to a new supplier.

I have always recommended First Direct, but I am afraid this experience has left a really bad taste in the mouth. One of the few corporates that I have trusted over the years have shown their true colours. They are not quite the chummy, happy bunch they purport to be. I will be glad to leave.

Thanks very much First Direct for being so helpful during this crisis #we'reallinthistogether 

lonibra

I can understand your frustration. But the question is, at the present moment in time, would you be eligible for the competitive offset rates that you see with the likes of Scottish Widows, Accord, Clydesdale, etc?

Have you checked with an MB to make sure that you can't move now? I was in a similar position but hugely underestimated my chances until I actually spoke to an experienced MB.

kingstreet

You need them to produce written confirmation you are a mortgage prisoner and this is given to the new lender to evidence your position. As FD is not a "closed book" lender I'm not sure this will be forthcoming.

FD is just an HSBC sort code from my POV and reflects its parent's attitude most of the time.

maisie_cat

We were in the same boat, been with FD since 1995 and a mortgage customer 2003-2019. Our income dropped and we were stuck with the uncompetitive offset rate.
I was convinced that we were on a tracker rate but couldn't find the paperwork so we were stuck with both FD itself and the product.
In the end we sold up and downsized so no mortgage, all this predated the pandemic so it's not a new thing. 

getmore4less

Just looked and FD clearly no longer want the offset product with lowest rate rates  3.29%.

doubt Scottish Widows have a rate  a 1/3 of that (<1.1%) 


Those that got in when they were doing great  lifetime tracker offsets will be ok.

Not sure when the change to term based offset started that could have the potential trap.

Found a FD rate of base + 2.49% for lifetime offset 2016  so by then they had already lost the edge over the earlier offerings  of base + < 0.5%

I suspect the good rates started to disappear around 2009,  Oct 2008  they still had +0.79% with no fee or +0.49% with £999 fee  

seen 2010 article saying FD lifetime offset rates were still ok(ish)
+1.79% 65% LTV.
+2.29% 75% LTV
+3.49% 85% LTV.

Probably worth getting a broker on the case, but moving off interest only(which FD offsets operate on) may be a tough.