I recently helped a client refinance one of their buy to let properties in order to capital raise £190,000 on the £240,000 property, although a few issues stood in her way. Not only are lenders more likely to shy away from a large debt consolidation at around 80% loan to value (LTV), my client also had a late mortgage payment recently and a CIFAS mark already on her credit file.
Having approached a vast array of lenders, we were met by the same barrier every time: the CIFAS mark. Nearly every lender on the market is a member of CIFAS Fraud Prevention and understandably takes a dim view of those on the database, so I needed to find a lender open to considering the wider circumstances of my client’s case instead. Because of this, we needed to find a lender who would be willing to manually underwrite the case from the beginning, rather than by her credit score.
My client’s CIFAS mark was the result of her ex-husband having applied for a mortgage without her consent and disclosing inaccurate information on the application. As this was not my client’s fault, there was the potential for it to be removed earlier than is usual practise – in just 6 months compared to the usual 6 years. This also meant we were able to provide an explanation for the mark and prove that the case was actually of reasonably low risk for a lender to take on.
However, even when disregarding the negative mark, most high street lenders are uncomfortable with lending for the purpose of debt consolidation, which is often limited below the level we required. Equally, my client would need to explain the issue of the missed payment on her credit file, which would also cause many non-specialist lenders to simply disregard the application.
Luckily, I already had an excellent relationship with a specialist lender who was willing to discuss the circumstances of this case fully. My client also provided a satisfactory explanation for the missed payment, which meant we were able progress swiftly through the initial stages of the application that would otherwise have been considered unfavourable.
I managed to secure an interest only, 2 year discounted variable rate of 4.39% with no early repayment charges. This meant my client would be able to remortgage in 6 months’ time onto a much cheaper product once the CIFAS mark was removed.