The first thing that attracted me to a First Direct (a division of HSBC Bank plc) offset lifetime tracker mortgage was that it was listed at the top of the 'best buy' tables on moneysupermarket.com. A quick search revealed that it had also been voted the best lender for customer service in the Which? Money survey on mortgages 2008. This was the second year running that First Direct had come out on top. With a score of 90% first direct was 11% ahead of its nearest rival in the survey of 18 lenders. First Directs mortgages have won numerous awards over the years, the most recent being What Mortgage Magazine's winner of Best Direct Lender over 5 Years (February 2007).
In January 2009 their offset mortgage was one of the lowest rates on the market. Although I was not actually looking to remortgage at this stage because I still had nine months to run with my old mortgage the very attractive rate encouraged me to take a closer look at the product. I was at that time with the Alliance and Leicester and had two mortgage products with them due to releasing equity in the last couple of years to purchase an overseas property.
I was not particularly happy with the Alliance and Leicester. Despite the many falls in the Bank of England Base Rate the Alliance and Leicester mortgage products I held the interest rate remained very high at over 5% - they did not pass on the cuts to customers! Due to the fact that house prices were fast falling, I felt that maybe it would be advantageous to look around now for a new mortgage. If I waited till September (when my redemption penalty would end) I feared that I would not be eligible for a decent rate mortgage. To redeem my current mortgage was going to have a hefty £3000 penalty plus administration charge of £300.
If I was to stump up the early repayment penalty fees I needed to find a product that was going to make the switch 'worthwhile'.
The First Direct offset Mortgage seemed to fit the bill. The offset base rate tracker 2.89% mortgage (1.89% above the base rate - 80%LTV) being offered by First Direct at that time seemed very attractive to me, despite the £799 product fee. Since then, due to cut in the Bank of England base rate, it was been reduced to just 2.39% making the interest repayments just under £400!
I did my calculations and worked out that if I switched to the first direct lifetime tracker offset mortgage my mortgage repayments (interest only) would be reduced to £400 less than half of my current repayments which were a massive £900. With the difference- £500 - I could make overpayments and bring it down to what it would have been in September had I stayed with the Alliance and Leicester. From October onwards I would be on a competitive rate with no penalty fees and the ability to make overpayments.
I decided to apply. I filled in the application form online and within minutes I was contacted by an agent from First Direct. He went through the form and the application process with me in some detail. I was very impressed with how he handled the process and he was very courteous and not at all a pushy type... I guess it took around 45 minutes to do but it was well worthwhile. Initially I was told that my and my husband's earnings were not quite sufficient enough to cover the cost of the mortgage required. However, I was quickly reassured and told that it was not necessarily a problem. The person I was talking too said he needed to consult with his manager. They did a very quick credit check on me and within minutes said because of the 'good ' check they would be prepared to advance the amount we required.
It was really good to speak to a real human being and to be treated as an 'individual' and not just another number. In fact, every time I contacted First Direct I get though straightaway - no long convoluted telephone options before you get through to a real person.
The next step was to have a valuation on the house. For the estimated value of my property the fee was £200. First Direct quickly arranged for the valuer to come and do a valuation.
The only disadvantage about the mortgage process was that there was some delay in the proceedings. This was because I live on an estate where there are communal areas that require upkeep. I am required to pay an annual maintenance fee to a Landscape Management Company. Before the monies could be released, First Direct had to receive a letter from the company. Unfortunately, the company took a long time to respond. Although First Direct kept contacting them by letter I personally felt that the whole process could have been speeded up by a direct telephone call to them. In this area they did not keep up to their slogan of 'Let's Keep It Moving'!
Despite starting the application process in January the mortgage only began in mid May. My plan to pay off the amount added to the mortgage due to penalty charges will now take until December to clear as opposed to the end of September. However, I am very happy to have made the change as this product is no longer available at such rates. They will now only advance 75% of the LTV and the interest rate is now 2.89% (the Bank of England Base Rate plus 2.39% for the life of the loan). Also if my husband or myself should lose our job we would still be able to afford the repayments. This provides great peace of mind.
I will try to explain in more detail the special features of first direct's 'offset' mortgage.
The offset Base Rate tracker mortgage is a simple, straightforward offset Mortgage which must be repaid over a pre-agreed term and which tracks the Bank of England Base Rate for the duration of the loan. So if interest rates fall, so do repayments. Similarly, should they rise repayments would increase. Payments are not fixed as they are linked to the Bank of England Base Rate.
An administration closure fee of £149 is payable on redemption of the mortgage. However, this fee is waived if you are transferring to another first direct mortgage product. With an offset Mortgage at First Direct you have to have or open a First Account with First Direct. You can link the mortgage to your current account and Savings Accounts. You then only pay interest on the difference. For example, if your outstanding mortgage value was £100,000 and you linked a savings account to this, which had a balance of £10,000, you would only pay interest on £90,000 of your mortgage.
In effect this means that because the accounts are linked you are using your 1st Account and savings account balances to reduce the amount you owe on your mortgage. You do not earn credit interest on these accounts.
**Features of the Mortgage**
- Another feature of this offset mortgage is that you can withdraw capital at any time, up to your agreed limit, which can be up to 75 - 80% of the value of your property.
- The daily interest on the mortgage is added up at the end of each month, and you are advised how much you owe at least 14 days before it is due.
- If you choose to make capital overpayments on your mortgage, you can take a break from them at any time and borrow back the capital you have previously paid (up to 80% of LTV). Say for example you wanted to carry out some home improvements you would not have to remortgage and have all the hassle and costs associated with that. The downside is that it is also way too 'easy' to get at that cash and you will have to be disciplined!
-If you move house, then the mortgage rate you have with your first direct mortgage will also move with you - with no mortgage transfer fee to pay.
- With the First Direct mortgages, you are free to choose a monthly repayment date to suit your needs. If you move the monthly dates of your standing orders and direct debits that are debited from a linked 1st Account, to leave the money in your account as long as possible, you have a greater balance to offset against your mortgage. This helps to reduce the amount you owe, so you pay less interest.
To be eligible you need to:
* agree a mortgage of at least £30,000
* be aged 18 or over
* open a first direct 1st Account if you do not already have one
* use the mortgage for house purchase in England, Wales, Scotland or Northern Ireland for your own use, remortgage or for raising capital by releasing equity. First Direct do not lend for business purposes or buy to let.
The offset Mortgage must, in all cases, be in the same name(s) as the property ownership with a maximum of two people. Property ownership in three or more names do not qualify for an offset Mortgage.
How much will First Direct lend? Currently, they will consider loans up to 75% of the value of the property depending on the amount borrowed and your personal circumstances. If your property is valued between £1 million and £1.5 million, they will lend a maximum of 65% of the value of your property. If your property is valued between £1.5 million and £2 million, they will advance a maximum of 60% of the value of your property. If your property is valued above £2 million, they will lend a maximum of 50% of the value of your property.
In making a decision on how much you can borrow the following criteria is used. For a single application it is 3.5 times the gross annual salary. For a joint application the formula is 3.5 times the higher gross annual salary plus 1.5 times the lower gross annual salary or 2.75 times the combined gross annual salaries. However, as in my case, First Direct do sometimes operate flexibility in this area. The offset Base Rate tracker Mortgage is not available to customers remortgaging from an existing first direct mortgage.
If you are looking to take out a mortgage or remortgage I would highly recommend that you take a look at First Direct's products. I really like the flexibility and the portability that First Direct offer with their offset mortgage and, most importantly, there are no blessed hefty redemption penalties with the offset mortgage!!
This review may be on Ciao under the name of Krazikas.
Check out the dates on other reviews too.
They were slow, didn't let me use a normal solicitor and then sent my repayment monies for my old mortgage to the wrong account !!!
This mistake of accidentally sending my entire mortgage repayment to the wrong account is completely unacceptable.
I do not know many people who can afford to have 2 mortgage payments going for 2 different mortgages on the same property. I wouldn't be surprised if some First Direct employee used my mortgage money to pay off their own debt. I hope the FSA can do something to stop mortgage lenders from making such mistakes.
In my situation I was completely unaware that when I received the message from First Direct telling me that my mortgage was setup, that they hadn't bothered getting any confirmation that they had sent the money to the correct lender or got any receipt that my old mortgage was repaid.
This has been a terrible experience from start to finish. The extra mortgage payment has put me into serious debt with my bank account. First Direct advised me to cancel the payment which if I had done I would have been charged an extra £25 for bounced direct-debit. Also, I'm sure if you miss mortgage payments that your home is at risk.
This must have affected my credit rating with other lenders which during the current financial situation is the last thing I need.
In summary, don't trust First Direct, call them at least once a day, make sure you speak to your current mortgage lender so they can confirm what is happening.
I was looking around for a new mortgage deal because we are due to have an extension built in the Spring and it needed financing.
I was also keen to reduce the term of our mortgage significantly as I would like to retire without having to still be paying. I looked into the Offset mortgage which were on the market as I had a lump sum saved up to go towards th ebuilding and also liked the way that the bank account would be linked to the account .
We finally went with First direct because unlike some other offset mortgages you only have to pay on the outstanding amount rather than the amount that you borrow regardless of the amounts you are offsetting.
Basically offsetting works on the basis that all your savings accounts are offset against the total borrowing. Thus if I borrow 100K and have 20K in my savings account and bank account. I would only have to pay the interest on 80K. Obviously this 20K doesn't attract interest but as the cost of borrowing is higher that the interest gained you should be better off in monetary terms.
You have the opportunity to overpay as much as you want.
The only problems I have had was obtaining the quote originally - which took three phonecalls before the application forms finally arrived - but it was well worth chasing as after this the process was seamless. One of the conditions of taking out the mortgage is that you have to take the bank account out - but they handled the switch really well
This is about my second mortgage with First Direct. My original mortgage was a fixed rate and as the fixed rate period was due to expire I had been thinking about a new mortgage and also shopping around for a good deal. I must admit the Virgin One account looked very good value for money. I liked the idea of linking savings and mortgage together to lower interest repayments and maybe pay it off early. I'd not really been shopping around too much nor had I really given it much thought when my phone rang a few days later......... It was First Direct. They'd noticed it too. So I mentioned the Virgin One account, this kind of honesty perversely they encourage, I've been with them for eight years. The guy at the end of the phone asked me a few questions, I could hear the typing of keys over the phone and then agreed that it would suit me after looking into my accounts (I hold two current accounts, a VISA card and an ISA) with First Direct and said that as I do manage to save some of my income (don't ask me how) then it would be a good proposition. Then he mentioned at the time of writing whilst the Virgin One interest rate was 5.2%, First Direct's was 4.75% and I wouldn't have to go thorough the process of closing/opening accounts etc, etc. It was called the Smart Mortgage and he gave me a quote for lumping it all together. Phew ! That was quite a saving. Now I was interested...... A First Direct Smart Mortgage works in the same principle as a Virgin One account. You nominate the accounts you hold to all contribute to the Smart Mortgage, you can open as many accounts as you like to manage your money (think of them as pots). The mortgage debt is offset against all these accounts containing a positive balance and any savings accounts you hold with them. You pay interest daily (a big plus for any First direct mortgage). The result is even on my current repayment on a SmartMortgage, I could repa
y my mortgage a nd consolidated loans 2 years earlier.... Now I was really interested. This guy had called me to save me money ! So I asked for the bumf to read and considered it. I like to think I have some financial savvy and the only difference I could find is the Virgin One account gives you a credit card at the 5.2% rate, the Smart Mortgage doesn't. I really didn't mind that as I don't like credit cards and only use them for emergencies. You can draw against the allotted mortgage limit (70% value of your home) as a loan by calling them for approval. The repayment date is even flexible. The mortgage repayment must be before your 65th birthday. Basically, you get 4.75% on your savings, mortgage and also any other debt you might want to consolidate including HP for a car or credit cards. If you hold some savings, the amount is considered as equity against the mortgage capital and therefore lowering your interest repayment. Because of this, the 4.75% interest paid on savings is therefore tax free !!!! Overpayments are allowed with no restriction including lump sum payments as and when you have spare cash. There is no penalty for early repayment nor leaving the mortgage for another competitor even after 1 month of starting it. Payment holidays are allowed as well. The only drawbacks are it is a variable rate but guaranteed never to be 1% more than the Bank of England base rate and ISAs cannot be included in the list of nominated accounts. It was all presented in clear and simple language, it was common sense and for someone totally uninterested in finance, it was easy to understand. This is the one thing I love about First Direct, sure they exist to make a profit but they never use the small print to catch you out. They know they are good, they even encourage you to shop around. End of the day, they offer the right products, great service, easy to understand advice and they will call you back
at YOUR convienienc e, not theirs. Most of the work is done over the phone, even pre-filling out forms for you to reduce the hassle to you to a minimum. It was £195 to arrange, for that all the legal work is done for you, you have to fill out an arrangement form and an agreement form. Not difficult and I hate form filling. The rest is left to them. The fee even includes a valuation and you get a copy of that to keep. It takes 6-8 weeks, utterly painless, they write to you to keep you informed and you can call one person (they leave their name, number and their working hours) if you want to know what is happening. This is how banking should be. This mortgage is going to save me a small fortune, everything is managed by the on-line banking software. I've been with First Direct for over eight years now and they really are fantastic, everything done over the phone or net, always courteous and friendly staff. Another First Direct winning product.
I have recently switched to a First Direct SmartMortgage in order to escape from the rather punitive interest rates of another mortgage provider. First Direct were the first place I looked. I have banked with them for many years and they have been consistently helpful and reliable. I wanted one of the new style mortgages which are linked with a current account and/or savings account in order to reduce the amount of interest payable. This is exactly what SmartMortgage is. The interest rate is a low 4.75% and I effectively receive this on my savings and on any money lying around is my bank account too. The rate is linked to the Bank of England's base rate so you now that it's not going to suddenly become uncompetitive. Interest is also charged on a daily basis which means that you can make additional payments at any time and reap the benefits immediately. First Direct carried out the remortgage smoothly and efficiently, as I would expect. They dealt with everything themselves. I did not need a solicitor and I did not need to deal with my previous mortgage provider even to inform them that I was leaving them. The new mortgage actually went through before I had received written confirmation of the completion date. The first i knew of it was when I checked my bank statements online and found that SmartMortgage was up and running. Written confirmation came a couple of days later. I was impressed with the service. There was no 'hard sell' just good advice and the usual clear written product information. There was a £195 application fee to pay but this I felt this was a small price to pay for peace of mind.
I am a great fan of First Direct so it was my first port of call when considering a mortgage and once again they provided a fantastic and customer friendly service. In the first telephone call which I made, I explained to the mortgage advisor that I didn't understand the first thing about mortgages so he said he would explain it in simple terms - and he did. Without being patronising (a common problem with many bank staff) he explained the different types of mortgage and the benefits of each. The actual arranging of the mortgage can be done in principle over the telephone and within five minutes I had a provision figure of the amount that I could borrow and how much the repayments would be. Nothing could be easier. The surprise came when his final piece of advice was to check out other mortgage lenders before making a decision. He told me that First Direct were so confident that there's was the best service that they had no qualms about advising their customers to do this. So I took his advice. The first problem was that no other bank or building society would discuss this over the telephone so I had to go into town to see them. I made two different appointments and these both had two things in common: (1) they made no real effort to check if I understood what they were explaining even though they knew it was my first mortgage. One did not even offer my any alternatives - just took all my details and told me which mortgage was most suitable. The other offered such a garbled explanation of the alternatives that even with my recently acquired understanding of mortgages I didn't have the first clue what she was on about. (2) they both went in to some major hard sell to get me to make a decision - one telephoned me three times at home to check if I meant it when I said that I didn't want to go ahead with the mortgage she had offered. If First Direct knew that this is what it would be like, no
wonder they were confident that I could check out other banks and still decide to stick with them. Perhaps I just picked two particularly bad places but it was all far to stressful and time-consuming to keep trying when First Direct provide such a straightforward and comprehensible alternative. I have nothing but praise for First Direct in all my dealings with them. It seems to me that they have one thing that many other banks have lost - an understanding that you are a customer who is entitled to efficient and courteous service. The mortgage advisor was a prime example of this - his advice seemed perfectly tailored to me rather than some standard advice given to everyone. He was prepared to take the time to explain some basic points about mortgages to me and told me to ring him back if I had any questions that came to me later. But the most amazing thing was the way that First Direct are prepared to let their products and services speak for themselves. The felt no need to pressure me to decide then and there or to telephone me at home to hassle me into a decision. The information was merely provided and I was told that they would be available to talk to me whenever I had made a decision. They were so confident that their service was the best that they advised me to try others - and they were right - their service was the best. I would recommend it wholeheartedly.