A client recently came to me as she wanted to remortgage to raise capital from her existing property, based in South-East London for a number of reasons, including clearing debt.
My client already had an existing first and second charge mortgage on the property, so she wanted to capital raise in order to pay off the second charge mortgage plus a sum of debt. She also wanted to raise additional funds to put towards home improvements and to purchase a new car.
However, the biggest challenge we faced with this case, was the fact my client had a late missed mortgage payment from 11 months ago, which was showing up on her credit file.
This is generally a very big no-go for every high street lender no matter how good her ability to repay would be, as it suggests there is a risk of missing further payments in the future. Essentially, I would have my work cut-out in presenting her case carefully to a lender…
If that wasn’t all, my client’s home was also an ex-local authority property, which can be difficult to secure finance for anyway. Many lenders have tightened criteria when it comes to these types of properties, as they tend to fall in value first and fastest if the housing market were to crash.
Despite taking all of this into account, I was able to speak to a lender (who just so happened to be a high street bank itself) that was willing to consider my client’s profile under these circumstances.
The lender was happy to disregard the late payment and offer the full amount needed of £136,000 on the property value of £235,000.
I was able to secure an extremely good rate, which worked out to be cheaper than what she was originally paying for both the first and second charge mortgage put together.
I managed to secure a 2 year fixed product with a rate of 2.04%, providing a very affordable deal for my client with the second charge removed.