Monday 28 February 2005

Trust versus directness.

Speaking of the house sale that fell through, it's about time I slagged off First Trust. They're a Northern Irish bank. They're shite.

We started by going to the One Stop Mortgage Shop, who recommended First Trust on the grounds that they (a) are willing to lend lots of money to graduates with good prospects and (b) give 100% mortgages. Wrong on both counts. The Mortgage Shop submitted our application to First Trust and told us that we could expect a call from them the following Monday, maybe Tuesday. After calling the Mortgage Shop three times to get them to chase First Trust, we eventually got a call from them about two and a half weeks later. That call was just to arrange an appointment for us to go in and see them; the appointment wasn't for a few more days. All this time, we had an offer on our chosen house, so time was of the essence.

One Stop Mortgage Shop knew First Trust's requirements back to front, so told us everything that we'd need to take in to our meeting. We went armed with every bit of paperwork required. Peter, the First Trust mortgage bloke, refused to take photocopies of some of the bits of paperwork, telling us that they wouldn't need them. All he did, it turned out, was photocopy things, fill in a form, and send it on to the real mortgage people, whom we didn't see. They eventually went through our papers and, after another couple of weeks, another mortgage bloke called Alan called us to ask us to go back in to provide various extra things that they needed, every one of which we had taken in the first time and Peter had refused to take copies of. That was annoying.

Then things really went downhill. They surveyed the property.

The surveyor recommended that we get a damp and timber specialist's report done on the house, which is fair enough. We did so. The report said we should get a damp-proof course put in and some woodworm treatment. Again, fair enough. But this is where the bank went a bit strange.

Firstly, they wanted to put a condition in the mortgage specifying that we had to do this work within three months of buying the place. Yet again, fair enough. But they also wanted to reduce the mortgage by the projected cost of the work. Remember, they claim to offer 100% mortgages, so they're trying to take a cut of the skint-people market. Yet they want to force us to put a deposit on the house and insist that we spend thousands of pounds on building work — and, by the way, they were also insisting that we couldn't take out any further debt to pay for either, and would credit-check us to make sure we didn't. Since they knew that we'd gone to them in the first place because we couldn't afford a deposit, what on Earth made them think this made any sense? They're entitled not to want our sort of custom, but, if they don't, why have a marketing drive aimed at the likes of us?

And why did it take them so long to do everything? All the above took months. Although the sale was eventually scuppered by the vendor's bastard lawyers, it was First Trust who provided the initial huge delay that pissed the lawyers off and gave them the excuse they needed.

A couple of extra details here, that really should have rung more alarm bells with us. Firstly, while First Trust were demanding a deposit, they called it a "retention". Now, First Trust charge a big admin fee — the "higher lending fee" — for mortgages over 95%, which is their right. But what they were doing here, rather than saying "We'll only lend 97% on this house," was saying "We'll still lend 100% on this house, but with a retention of £2000." Since the "retention" didn't bring the total mortgage down to the 95% mark, we thought this was an academic distinction. As we were later to discover, we should have taken more notice of their dodgy reasoning. I'll come back to this.

Secondly, it was clear that the surveyor was working with the bank in an unusual way. Our lawyer noticed it (and got driven spare by it, frankly). The bank and the surveyor appeared to be contacting each other and exchanging views on how much the mortgage should be for and how big a deposit — sorry; "retention" — if any, the bank should demand. This isn't what a surveyor's supposed to do. The surveyor's supposed to tell the bank how much the place is worth and whether it's a good risk. This surveyor was telling the bank what the terms of our mortgage should be, and the bank were bowing to his opinion at every turn. Worrying.

So, on to house two. First Trust assured us that, this time, since our mortgage was already agreed in principle, all they'd need to do was survey the place and either approve or deny it for lending, so there would be far fewer delays this time. Bollocks, as it turned out.

We'd offered £78500 for the place. The surveyor went out and valued the place at £76500 — exactly two grand less than we'd offered, which was suspicious, since £2000 was the amount of "retention" the bank had wanted from us the last time. However, he also specified on the survey that it would be worth £78500 after we'd put a damp-proof course in. In other words, the bank had, in order to avoid the arguments they'd had with our lawyer the first time round about what is or isn't a retention, arranged for the surveyor to build the "retention" into the survey. This is just wrong.

You might be thinking that I'm just whinging and that the bank and surveyor hadn't really done anything wrong at this point, but that's certainly not what our lawyer thought, and you might change your mind when you hear what happened next. We contacted the vendor, explained what had happened and that we were skint, and offered to split the difference: would she agree to accept £1000 less? She agreed. We told the bank. The bank contacted the surveyor, who got back to the bank to tell them that, in that case, the place was only worth £75500. That's right: the surveyor was changing his valuation to make sure that, no matter what price we agreed to pay the vendor, the bank would always lend two grand less.

Again, we got a damp and timber specialist's report, and, again, it recommended a damp-proof course. (Since moving in, we've discovered that we almost certainly don't need one, as the place isn't damp, but that's another story.) This builder was a pain in the arse and insisted on quoting for replastering half the house because he thought it needed it, even though this had nothing to do with the alleged damp. First Trust insisted on ignoring the details of his quote and only looking at the total figure, which was about £9500. They showed this to the surveyor, who immediately changed his valuation to £68500 — £10000 less than our original offer and £8000 less than his first valuation. He had now given three different valuations based on one visit to the property.

Now, the reason we were able to get this house at such a bargain price was precisely that it needed work. Remember where I said it was twice the size of and cheaper than house one? It's also in the same street. House one had two small bedrooms and a box room and a tiny garden, and was £83000 — and wasn't even in good condition. House two has four large bedrooms and a big garden and was four and a half grand less. Of course it needed work. We knew that. What the surveyor was saying was that the place would be worth £78500 after we'd done a hell of a lot of work to it. A quick browse through any of the local estate agents' windows shows this to be delusionary nonsense. And the surveyor didn't even have the excuse of ignorance, as he was the same guy who had surveyed house one, just up the road.

Now back to that whole retention-versus-deposit issue. What was really happening here was that the bank were refusing to give a 100% mortgage on the house, and, like I said before, that is their right. However, by arranging for £10000 to be deducted from the surveyor's valuation rather than the bank's mortgage offer, the bank could still claim to be offering us a 100% mortgage — 100% of the valuation, but only about 87% of the price — and they could therefore still demand the higher lending fee that applies to mortgages over 95% and they could still charge us the slightly higher interest rates that come with 100% mortgages. This, frankly, is a scam.

What it comes down to, I reckon, is that First Trust have an internal communication problem: their marketing people want them to go for the 100% mortgage market, while their mortgage department don't want anything to do with it. In a case like that, the easiest way for the mortgage department to avoid corporate in-fighting is to shift the responsibility for turning down business onto a third party — the surveyor. I'm being charitable here. The other explanations are that they're simply a bunch of unprofessional, icompetent, ignorant bastards, or that they're deliberately setting out to rip people off.

Anyway, Alan had assured us several times that all we were waiting for was confirmation of the mortgage that First Trust would definitely give us, then he finally rang up to say good news: here's your mortgage, and we're reducing the amount by ten grand. I was incredulous. Then he suggested to me that I might want to ring the vendor and ask her to reduce the price accordingly. I pointed out that (a) that was insane and (b) we already knew from experience that, even if the vendor were stupid enough to reduce her asking price by £10000, First Trust's pet surveyor would immediately lower his valuation by the same amount. I told Alan that we thought it was counterproductive to deal with a mortgage lender who kept scuppering our attempts at buying a house, and told him to return the higher lending fee immediately. And that was the last of them. (Unsurprisingly, it took them two or three weeks to return the higher lending fee, with no interest.)

This was the eleventh hour. It had been dragging on for ages; the vendor was beginning to ask whether we really intended to buy the place; we'd been assuring her that everything was going smoothly, that the mortgage would be ready shortly; and now this. But two things had changed since we'd started the whole process. First Direct, with whom we both bank, had upped their maximum mortgage from 80% to 95%. And the whole process had taken so long that we had saved enough for a deposit.

An hour or so after that last call from First Trust, I called First Direct. I was on the phone for less than an hour; by the time I hung up, they had approved me for a mortgage for the amount I needed. I gave them the name of the surveyor that First Trust had used, and explained that he had given three valuations based on one visit. First Direct agreed not to have anything to do with him. They sent out a surveyor a few days later, who simply said that the place was worth what we were paying for it and was a perfectly good risk for the bank — no conditions on the mortgage, no report needed from a builder, no mucking around. First Direct aren't perfect, so did proceed to cause one or two quite exasperating delays, yet, in the end, even with those delays, changing banks and starting the whole process again from scratch delayed our moving-in date by just two weeks. That's a shorter delay from First Direct on the entire mortgage application process, from first contact to moving in, than the length of time it took First Trust to get around to calling us back to make a first appointment. Oh, and, rather than asking us for a large admin fee, they paid us to take out a mortgage.

Bank with First Direct. Not only are they brilliant, but other banks are run by bastards and fools.


Reading back over that, I realise that I'm being unfair to First Direct. They processed the mortgage quite incredibly quickly for us: because of the situation First Trust had left us in, First Direct fast-tracked the whole thing. What I referred to as "delays" were actually just times when the process slipped from extra super fast to plain fast.

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