Remortgage and Debt Consolidation for Client with Poor Credit Score

The Client: An existing homeowner with no additional properties.

The Property: A three-bedroomed detached family home within commuting distance of a large North-East city. As well as plenty of transport links, the property also benefits from the surrounding countryside.

The Finance: Our client was looking to remortgage the property in order to clear his existing offset mortgage (a mortgage linked to your savings and can help you reduce interest payments and shorten your mortgage term) and consolidate some unsecured debts accrued amidst difficult personal circumstances. He was also keen to keep the mortgage term short so that he would be mortgage-free by the time he retired.

The Challenge: Unfortunately, our client had several defaults on his credit file, excluding many lenders from our search. As he also wanted to clear some of his unsecured debts, he’d need to release some existing equity from the property to pay these off, essentially consolidating the debt into his new mortgage to reduce overall repayment costs. Not many lenders are comfortable with clients doing this as they regard them as high risk.

The Solution: Having spoken to the client about the circumstances surrounding when he accrued the debts, it was apparent that this was unlikely to happen again. Therefore, we approached a lender specialising in mortgages for people with poor credit scores and explained our client’s situation to them. With substantial equity within the property and a clean record prior to the difficult period of his life, the lender was understanding and willing to proceed. Here are the details:

Property Details

Property value: £200,000

Loan amount: £115,000

LTV: 58%

Rate: 3.85% 2 years fixed

Term: 15 years, 9 months

Mortgage payment:  £819.45 per calendar month

Lender arrangement fee: £995 added to loan

Consultant: Ross MacTaggart, 01732 471630

22nd September 2021