At Capital Mortgage UK we endeavour to assist clients with a wide range of circumstances and needs. If it is possible to get a mortgage then we will do everything to make that happen for our clients. With that in mind we are publishing a series of case study examples of complex mortgage applications for which we have secured required end result for our clients. Many of these examples are where the client has been turned away from their bank and other mortgage brokers. We thank all of our clients that have allowed us to use their experience with us to show how we can help others – all of our clients information is securely protected.
Debt Consolidation – The Plan
The clients came to us as they were due to remortgage at the end of their current fixed rate deal but looked to raise money to consolidate unmanageable unsecured debts as well as look to raise further funds to upgrade the property. They had around £47,000 worth of unsecured debt the majority being credit card commitments, they also looked to raise an further £8,000 to carry out the home improvements. Total capital raising of around £55,000.
The clients income for affordability was reasonably comfortable for the mortgage they were looking to take out and benefited from having a significant level of equity in the property, however due to the level of debt and the clients debt to income ratio this ruled out a wide range of lenders. Other lenders due to the level of the debt would consider the clients, although would treat the commitments as being ongoing rather than marking them to being repaid which ruled out these lenders. Despite a large proportion of lenders being unavailable we were still able to find a solution and come up with creative solutions to ensure everything fitted within complex lender criteria.
Much of the unsecured debt was on credit cards. The issue with credit card debt from a mortgage perspective is that they have an impact on the lending you are able to borrow. Also if you are making the minimum payment to a credit card you will be paying predominantly interest to maintain the balance and paying this down only slightly potentially which means you will essentially continue to make a similar monthly payment each month without the balance decreasing.
To work this out on a monthly basis the client was paying the following –
Mortgage – £579 per month
Credit commitments – £1,375 per month
New mortgage payments – £897 per month
Consolidating debt within the mortgage has saved the client around £1,057 per month. Not only that by enveloping the commitments by into the mortgage this will all be paid down on a monthly basis, unlike making the minimum payments to a credit card.
Our client was refused by their bank, they were also told by other brokers it was not possible….
If you are in a similar position and would like to find out if we can help you please contact us for a free mortgage consultation.
*** This article is not mortgage advice and should not be understood to be mortgage advice. The figures have also been simplified for illustration purposes. For mortgage advice please speak with your mortgage adviser who will discuss your individual circumstances ***