A lender will need to see your bank statements to learn more about your spending habits. They will analyse your bank statements to determine whether or not you are the sort of person who can manage your money responsibly and can afford to keep up regular mortgage payments.
After all, a mortgage is likely the most significant financial commitment you will ever make in your life and is not something to be taken lightly.
You have several ways to obtain your bank statements either by post, over the counter at your local bank or print from your online banking platform.
As stated above, they need to know you’re responsible with your money. One of the things they’ll be looking at is if there are any overdrafts. Using this often is not necessarily a bad thing; regularly exceeding the overdraft limit is not ideal.
More factors to be careful with are potential returned direct debits, showing a lender you are not consistently reliable, and not disclosing loans at the application stage won’t look good if the lender finds any outgoings on your bank statements that you failed to mention.
Another awareness is if you have missed payments for personal loans and things such as credit cards. What will impress the lender is demonstrating that you handle your money well and meet payment deadlines.
If you have a history of gambling, the occasional bit of fun is harmless, but if you are frequently wagering significant amounts of money, whether you’re making it back or not, the lender will consider whether or not these transactions are reasonable and responsible.
For more information, check out our article “Do Gambling Transactions Look Bad on My Bank Statements?”
The answer is simple – be sensible. Typically, a bank would ask for up to three months of your most recent bank statements. These will show your salary credits and all your regular bill payments.
Ensure that your bank account is conducted in a manner that shows you are reliable and manage your finances well.
The first thing we’d suggest is that if you are a frequent big spender, you take a break for some time. During this break, you will find yourself in a better financial state and could improve your mental health.
If you need to save some extra money, some choose to cook at home instead of takeaways, stop treating yourself to unnecessary large purchases, and limit your subscriptions; this will help free up additional cash to ensure you can pay bills on time.
This boils down to simply being sensible and planning with plenty of time ahead of what you’re looking to do. The further away you find yourself from bouts of debt and financial uncertainty, the better your chances will be with a lender.
Whether you’re a first time buyer, moving home, or self-employed in Manchester, it’s always essential to keep on top of your finances.
If you have a history of bad credit history and are unsure of what to do next, you can always enquire about specialist mortgage advice in Manchester by getting in touch with us today. We’ll advise as best as we can to help you through your mortgage journey.
Regardless of your mortgage situation, you could be a first time buyer in Manchester, a home mover or looking to remortgage. Your lender will always want a copy of your bank statements.
They will analyse your bank statements to determine whether or not you are the sort of person who can manage your money responsibly and can afford to keep up regular mortgage payments.
It would help if you thought about your statements and what other elements of your banking say about you. One trend that has come into highlight is the question of gambling transactions on bank statements.
There is nothing illegal about having an annual flutter on the grand national or regular use on licensed gambling sites. However, even the bookmakers and gambling advertisers urge customers to ‘gamble responsibly’.
This is the same message to bear in mind when it comes to applying for a mortgage. It is not the lenders’ job to tell you how to live your life, how you spend your money or preach on moral rights and wrongs of gambling. They do however have a duty to lend responsibly.
If lenders need to prove to the regulators that they are making careful lending decisions, it isn’t entirely unreasonable to expect the people they lend to be responsible for their finances.
As we mentioned above, just because you have the odd gambling transaction on your bank statements doesn’t mean your mortgage application will get declined. The lender will consider whether or not these transactions are reasonable and responsible.
Your lender will mainly look at the frequency of transactions and the overall impact on the account balance. If these gambling transactions are small and infrequent, making no significant impact on your overall regular credit bank balance, then they are likely to be overlooked.
On the contrary, if you bet most weeks and are constantly overdrawn, the lender is likely to view this as irresponsible and could decline your application.
Remember, lenders are financial institutions that either directly or as part of a wider group often provide various products, such as current accounts, overdraft facilities, credit cards and personal loans. The way in which you conduct these accounts will impact your ability to obtain a mortgage.
For example, having an overdraft facility and occasionally using it is not inherently wrong; regularly exceeding the overdraft limit is not ideal.
Your lenders will look for excess overdraft fees or returned direct debits because these would generally show that the account is not being well conducted.
Other things to look out for include credit transactions from pay-day loan companies; “undisclosed” loan repayments. They would look out for any missed payments and consider how much of a typical month is spent overdrawn.
The answer is simple – be sensible and, if possible, plan ahead. Typically, a bank would ask for up to three months of your most recent bank statements. These will show your salary credits and all your regular bill payments. Making sure that your bank account is conducted in a manner that shows you are reliable and manage your finances well.
If you are a regular gambler, maybe think about taking a break or setting limits, there are features on most gambling apps that can help with this. As well as helping your mortgage application, this may also be good for mental health.
If you are a first-time buyer, home mover or looking to remortgage in Manchester but need some support or guidance, you should get some specialist advice from a mortgage advisor in Manchester.
Our advisors can guide you through the whole mortgage process and help you with your application and get you on track so that lenders will be impressed.
Most homeowners in Manchester will never imagine that they’ll miss their mortgage payments, although sometimes an illness or family emergency can cause financial struggle, especially for those with minimal savings and low-income.
It is even more difficult for those who don’t have an insurance policy that would cover their mortgage payments in such a possible event or outcome.
So, we are here to answer the following questions: what should you do if you think you will miss a mortgage payment and how can you recover afterwards?
If you think you’re going to miss an upcoming mortgage payment, the first thing to do is inform your lender. As soon as you miss a payment, this gets instantly marked on your credit record, which could later affect your ability to get a mortgage/remortgage in the future.
Your lender is required to offer support and guidance to borrowers going through a difficult time. Depending on your circumstances and your lender’s criteria, there may be options available that can help you avoid missing a payment.
The most important thing is that you don’t miss the payment because your credit record gets impacted immediately.
Don’t worry about feeling embarrassed, you are not alone—many people will be in the same or worse situation, you won’t be the first or the last who has contacted a lender about this scenario.
If you don’t manage to sort out an alternative arrangement in time and cancel your direct debit or allow your payment to bounce due to lack of funds, your lender may take several attempts to retrieve the money. Depending on the lender, there could usually be several attempts and maybe a period for one missed payment, but you could be hit with a late payment fee, hence impacting your score. Therefore, your ability to get accepted for a mortgage and the amount that you can borrow in the future may be affected.
Once you’ve missed a payment, your lender will want an explanation as to why this had happened.
This will be dependent on the number of missed mortgage payments and also how much time has passed since.
It may still be possible depending on the answers to the above, but it will most likely limit your options and the deals available will typically have higher interest rates.
Ultimately, the recommended option is to protect yourself against missed mortgage payments and to take out income protection insurance that may cover you if you can’t pay. Some think they’ll never need it, but ultimately not having something in place, such as a protection policy or savings to fall back on, can add to what is already a difficult situation.
If you need any additional support or guidance, please speak to one of our Mortgage Protection and Insurance Specialists in Manchester and find out which insurance will benefit you.
After the government introduced the Help-to-Buy Scheme, many home builders opted to start selling newly built houses on a leasehold basis instead of a freehold one. Some people were wondering, though, what exactly is a leasehold house?
In simple terms, you own the property, but the freeholder owns the land on which the property’s built. These leases tend to span hundreds of years, usually beyond the lifetime of the original holder of the lease.
The catch with Leaseholds is that you only own the property and not the land. Meaning you may have to pay ground rent, various service fees, and at the end of your term, if the lease hasn’t been extended, the freeholder can choose to back control of the property if left unchallenged.
Regarding the end of the lease and the service charges, you should always have the right to extend your lease if that’s what you would like to do and challenge any fee changes, though, for more clarity, we consider speaking to a Conveyancing Solicitor, as it’s their job to cover the legalities of properties.
Some of the fees can fluctuate, too, as and when the leasehold management company wants to change it, so it’s always worth making sure a Conveyancing Solicitor reads over your agreement carefully and precisely to ensure it is fair and not too much.
You own the property for the length of your lease term. As explained before, the freeholder may be able to take their property back at the end of a period if you don’t renew, but if your term gets taken out over the course of a few hundred years, that property is pretty much yours for the rest of your life, unless of course, you sell it.
One area that may require some consideration ahead of time is planning to make any home extensions or improvements. Whilst this may not always be the case with every freeholder, the majority will want you to seek permission for any changes on the land they own.
The process of obtaining a mortgage on a leasehold is an interesting one. You will find that not all lenders will accept this kind of deal. However, those who do usually will only get it if your term is at least 60 years. The reason for this is down to their ability to resale in the event of repossession.
If your term is shorter than 60 years, you most likely will have to discuss the possibilities of renewing the lease on the property with the freeholder, along with a legal representative.
There has been a particular issue with freeholding for some time and still ongoing, a practice known in the industry as “land-banking”. Referring to some freeholders holding onto land, whether they have a finished property or not and despite the need for more homes in the UK, purely because the market has changed and they’re waiting for a chance to make more money.
As you would expect, this kind of practice is not precisely well-received across the nation, many seeing it as unfair and leading people to request that the government abolish leasehold altogether, as a means of future-proofing against such a thing.
Along with the service fees involved, the need for renovation permissions and ground rent, it’s no surprise that leasehold housing can often seem like a bad deal; however, if handled correctly, it could still be an option that works out for you and your circumstances.
If you are looking at leasehold houses and debating whether to buy one, you should prioritise speaking to your Conveyancing Solicitor regarding the lease and other legalities involved.
It’s straightforward to get carried away with the joys you may feel when buying a home, but you also need to realise that this is a significant investment decision that you need to put much time into thinking about if you would like to get started on a leasehold house mortgage, please Get in Touch.
On this glorious, sunny day, we are celebrating achievement within the company. Every month we look back on each employee’s hard work from the previous month, rewarding those who have gone above and beyond in the workplace.
Everybody gathers round, in a moment to celebrate their colleagues. This is a real confidence booster for the winners, as well as everyone else in the company.
For use in the workplace it a confidence booster to not just those selected, as well as everyone else in the company, highlights how our hard work gets appreciated by not only our customers but also to other work colleagues.
It’s a special moment, being appreciated and thanked for all your hard work. It makes you feel like a valued member of the team.
Without further ado, here are our Company Champions for August of 2019.
Kayleigh encourages positivity in the workplace, like a ray of sunshine. Don’t let that fool you though, she’s a tough and determined member of our Mortgage Administrator team, with a strong desire to ensure all our customers get their deals finalised.
Once this is done, Kayleigh also asks the customers if they could leave us a review. After such a positive service from her, they’re always happy to do so. It’s these reviews that you see on our site, that encourage you to come with us when you have an enquiry. Without the reviews, you may go to another broker, one who can’t help to the level we can.
Brummie born Nathan is what is professionally referred to in the industry, as an advising machine. Okay so maybe not entirely professional, but who can argue with results? Nathan is one of our hardest working, longest-serving and highest achieving Mortgage Advisors.
Nathan is very similar to Annie, accepting appointments almost as soon as they come in, even when they’re last minute! He has been known to work during days off or even after hours if it means ensuring the customer gets the 5-Star Service we know they deserve.
Not one to sit idly, Nathan also likes to complete as many mortgages as humanly possible, making sure his cases are done promptly and efficiently, before quickly moving on to do more. He truly cares about his customers and he shows this daily through his work.
In first place, we have Michael Sallabank. Michael, or as he affectionately is known, Mikey, started in early 2018 as an apprentice in our Marketing Department.
He has spent the past year and a half working incredibly hard to achieve everything in his path. Within the last few weeks, Mikey was presented with a certificate, for completing his Level 3 apprenticeship in Digital Marketing.
Mikey is also known for his desire to solve every problem he comes into contact with. He does not like problems he can’t fix and tends to exhaust every option in his arsenal he has in order to ensure everything is back on track. 9 times out of 10, the problems can be solved.
This does not go unappreciated by his peers either as issues can often leave them anxious, however, Mikey is quick in his work and fixes the problems efficiently and promptly.
A huge thank you to all of our Mortgage Broker in Manchester team for working so hard last month. Here’s to another great month!
Adverse credit can happen far too often, and it’s not an uncommon approach for clients to come to us for Specialist Mortgage Advice in Manchester when they have a missed payments or have a lower credit score than is acceptable.
If you have missed one of your monthly mortgage repayments or something considered relatively minor, such as a missed payment to a mobile phone provider, you could get faced with a default attached to your credit report, which can harm your ability to obtain a future mortgage, as the lender with seeing it as a strong indication that you are a risk.
The good news is that missing any monthly payments or any amount of defaults will not necessarily mean you can’t get a mortgage, but you may need specialist help. The reason for this is that it is reasonably likely you will get turned down for a mortgage by a High Street Bank who may be risk-averse, especially if you only have a smaller deposit for the property you have your eye set on.
Specialist Lenders will want to know when the default got registered against you, and the further away you are from that specific date, the more likely it is that we’ll be able to provide some form of help if it was down to a life event such as separation, ill health or an untimely redundancy. People make mistakes when they are young, and they can feel that these financial mistakes cause trouble down the line.
We may also be able to help if you have had historic mortgage arrears or a County Court Judgement.
Below, we have gathered some helpful answers to common mortgage scenarios regarding Bad Credit Mortgages in Manchester & surrounding areas.
No matter the type of credit problem you have had in the past, your advisor will need to see an up-to-date copy of your credit report, which you can obtain online completely free of charge.
It’s vital that you obtain your credit report before deciding to apply for a mortgage, especially if you have been having any doubts about your credit history. The reasoning for this is that undertaking multiple unnecessary credit searches can further damage your credit rating.
The answer to this depends entirely on your circumstances. Some customers may be a little perplexed when it comes to the impact of their credit. It may look bad, they may have had something flag up and cause problems, but they have a sufficient income & enough deposit to reduce a rate and get a favourable mortgage. Why won’t lenders allow them to borrow a specific amount for a property? Ultimately it all comes down to risk.
The lender needs to have the utmost confidence that you can pay back your mortgage payments without the likelihood of any form of arrears occurring. If the unfortunate happens, your home may get repossessed, which they definitely would prefer to avoid. Though it might sound rather complicated, there are still plenty of routes to take for people looking to get a mortgage with bad credit, even if those routes may incur slightly higher rates. Getting in touch with a dedicated Specialist Mortgage Advisor in Manchester like us will be the most appropriate next step to finding your way towards a potential tailored mortgage to your circumstances.
Sometimes, you may find yourself financially struggling and unable to keep up the mortgage payments you previously had no trouble paying for reasons you may not exactly have control over. These circumstances are not an ideal place to be. Whilst it could be a momentary lapse for a month, one that you can pay back in no time, your record will show it as a missed payment.
There may be other credit issues too during this period, and when it comes to getting a Remortgage at the end of your term or a new mortgage after Moving Home in Manchester, you may find yourself in a spot of concern. Again, this will always end up coming back to the risk. Can the lender trust you not to find yourself in this situation also?
The good news is, we have had lots of experience helping customers who have found themselves with bad credit, especially when they’ve previously had or currently have a mortgage. If you feel like you are in this situation, then getting in touch with a committed Mortgage Broker in Manchester will be crucial to help you with your mortgage journey.
Customers may find themselves with all kinds of different adverse problems regarding their credit, all of which can harm their mortgage process. These issues vary from, but are not limited to;
🏠 Missed Mortgage Payments.
🏠 Credit Card or Loan Defaults.
🏠 County Court Judgements (CCJ’s).
Whilst these are all unfortunate situations to find yourself in, it’s not the end of the road. The process may take longer, there may be more hurdles on your path, and you may end up on a higher rate, but there are specialist lenders out there, some of which we have on the panel, who will accept you depending on what your circumstances are.
To increase your chances of success and open yourself up to better rates, we highly recommend that you take a look at improving your credit score. We have a helpful, in-depth mortgage guide that we’ve written on How to Improve Your Credit Score, which will hopefully put you in a better place for obtaining a mortgage at some point down the line.
How The January 2021 Lockdown Will Affect The Property & Mortgage Market?
From Tuesday 5th January, the Government has confirmed that you still have the ability to purchase or sell a home, as well as move home if necessary.
Boris Johnson, the Prime Minister of Great Britain, announced on 4th January 2021 that the UK would be once again going into a national lockdown, in a bid to keep the country safe and control the virus. All changes would take effect the following day on the 5th, with certain sectors remaining active throughout the next 6 weeks.
Working in a similar way to the lockdown we experienced back in November 2020, the property market will remain open for business as usual, meaning you are still legally allowed to view properties, continue with a property purchase and sell your current property.
It is important to note that you may still find yourself experiencing delays with some parts of the sector. Solicitors and Surveyors are in need of tighter restrictions once again, leading their services to take a little longer than initially expected. Experts are also predicting there to be a mad dash of customers attempting to take advantage of the Stamp Duty Cut before that eventually ends.
We would like to urge anyone thinking about or starting to move home, to stay safe and please make sure you’re following all the correct guidelines. Please see the latest government guidance on how you can protect yourself and others whilst moving into a new home.
We are happy to tell you that yes, 90% mortgages are still available for homebuyers. We are seeing signs more frequently of lenders having confidence in the UK property market as time passes. They know that the demand for properties is still very much alive, and that people will only start coming back when they are certain that they are able to get a deal with a 5-10% deposit.
You may also be able to access a 90% mortgage by way of a route like the Help to Buy Equity Loan scheme or the Help to Buy Shared Ownership scheme. Your trusted mortgage advisor will be able to explain how these methods could be used to help you obtain a mortgage with only a 5-10% deposit.
Mortgage Payments Holidays (a means of temporarily putting a hold on your mortgage payments, something that could leave you at a financial disadvantage during the pandemic) were due to end on 31st October 2020. Thankfully for many in need, this option for existing homeowners has now been extended to 31 March 2021.
If you are yet to take advantage of a Mortgage Payment Holiday, you’ll be able to request a break of up to 6 months. If you’ve already taken a Mortgage Payment Holiday of less than 6 months, you will be able to extend your current holiday up until the 6 month point.
Our dedicated and customer friendly mortgage advice service is still operational and we’re available to help out in any way we can. We have a team of dedicated mortgage advisors on board, who are free to answer your questions from 8am – 10pm, 7 days a week, all throughout the year. This past year has been difficult enough for a lot of people. As such, we would like to take as much stress out of your mortgage process as possible.
All customers will still benefit from a free initial mortgage consultation, no matter their circumstances.
For a brief explanation of the current status of the property and mortgage market, please see our video from company director Malcolm Davidson, recorded the day after the Prime Ministers public address.
In 2013, during the aftermath of the credit crunch, the UK Government introduced a scheme in aid to try and get the property market kickstarted again. This scheme was called Help to Buy; its mission was to assist First Time Buyers in Manchester take a step up the property ladder.
Confidence crept back into the market once Help to Buy was introduced, however, some home owners were still left a little wary. Even lenders were still being cautious with who they lent to and how much they gave out.
There are multiple different Help to buy schemes, some have stuck around since 2013, others have not. One of most popular Help to Buy schemes is called the Help to Buy Equity Loan, you can still access this scheme now.
If you are a First Time Buyer in Manchester, the Help to Buy Equity Loan scheme could be a great way to get yourself onto the property ladder. First of all, to access the Equity Loan scheme, you must be applying for a mortgage for on a newly built property and you must be a First Time Buyer. You used to able to access the scheme as a home mover, however this changed as of December 2020.
At application point, you must have a deposit of 5% or more and then the Government will loan you up to 20% to make up the total of a 25% deposit. For example, if you have a 10% deposit, the Government will loan you 15%; you have 7% they loan 18% etc.
This Equity Loan is a loan remember, it’s not free money. This means that the loan will have to be paid back on top of your 75% mortgage. You get 5 years to pay back this loan interest-free, after these 5 years, you will start gaining interest on the remaining amount which starts at 1.75%.
You may have already accessed the scheme and have reached the 5 year period for your interest-free loan. If you haven’t paid off your Equity Loan, you may find the help from an expert Help to Buy Mortgage Advisor in Manchester extremely useful as you may need to reorganise your repayments.
Through Remortgaging in Manchester, it may be possible to combine your remaining mortgage amount and your equity loan amount into one set of monthly repayments.
Again, if you are struggling to meet your repayments, it may be a good idea to speak to a professional Remortgage and Help to Buy expert in Manchester today.
The Help to Buy Shared Ownership was brought into place to allow homebuyers to purchase a percentage of a property and then pay the rest back with rent. The share percentage of the home will usually be anywhere between 25-75%, whatever percentage that remains on the property is owned by the housing association.
This means that you share the property and you don’t own all of it. The percentage of the property that you own can be increased at a later date. As a Mortgage Broker in Manchester, we usually find that people increase their share in the home once they have settled in or when they have a little more money.
Are you in need of Help to Buy Mortgage Advisor in Manchester? If so, we are here to help, we have been helping struggling customers secure Help to Buy mortgages for many years now and know exactly how to guide you through the process in a fast and friendly way.
We are available from 8am – 10pm, 7 days a week, so don’t hesitate to get in touch with us for expert Help to Buy Mortgage Advice in Manchester.
Various business owners regularly re-invest in their companies for them to keep growing. In periods of growth, they don’t always pay themselves as much as they should, holding them back from getting a mortgage in Manchester. For these sorts of Self Employed applicants, there is Self Employed Mortgage Advice in Manchester available if they feel the following case study illustrates them.
Owen was an HGV driver who had been redundant and decided to start his own business in the woodwork industry, having spotted a gap in the market. He sold the family home and moved into his in-laws with his wife and children to set up from their garage.
He used the redundancy money and house sale proceeds to buy some stock and set off on his journey into self employment. Things went well, and within a couple of years, the business was making a small profit.
Owen and his family cut their materials accordingly and aggressively minimized their expenditure to allow the business to grow more quickly. Luckily they had no rent or mortgage to pay each month, and Owen only paid himself a minimal salary in line with the annual tax-free allowance.
Fast forward four years and the business now had premises and was making almost £100,000 net profit. Still, with minimal expenditure, Owen continued not to pay himself properly. It was time for the family to buy a new home, but his Bank would only lend him £40,000 for a mortgage, and he approached us for help.
Owen’s Bank had let him down because he was only paying himself around £10,000. Despite the profits, he and his family could just about live without a dividend from his Limited company in the business.
Unfortunately, most High Street Lenders (with the odd exception) only assess affordability based on declared earnings. This usually is salary + dividends averaged over two years, but the salary alone in Owen’s case.
We managed to find a Lender who would assess Owen’s profits in a completely different way. The Lender took into account his “retained profits” and did not penalize him for his self-imposed frugal lifestyle.
This Lender was not interested in the fact Owen was not drawing out a dividend he did not need from his Limited company and agreed to lend him up to £400,000 (Owen did not need this much as borrowed a much lower amount).
Owen was not a self employed applicant looking to take out a self employed mortgage in Manchester while simultaneously seeking to minimize the amount of tax he paid aggressively. He made personal sacrifices in terms of income to grow a business from scratch.
He felt that his Bank was not interested in hearing the full story about his company’s growth and took a blinkered view of his financial situation based on income declared to the Inland Revenue. We found him a Lender who took a much more understanding picture, and Owen and his family are now back where they belong in a family home of their own.
If you are in a similar position to Owen or are a self employed applicant looking to take out a self employed mortgage in the future or needing self employed mortgage advice in Manchester, please get in touch with us.
Sometimes there needs to be much forwarding planning to take out a self employed mortgage, and we are happy to help with this. Some years ago, he sold his house and moved back into the family home to start up his business. They made lots of sacrifices personally to grow their business, and within a few years, it was starting to show good profits. He kept his expenditure down to the bare bones and kept re-investing in his Limited company.
He had a sound business with a six-figure profit but hardly any declared income because of his self-inflicted lifestyle choice. Indeed this is the kind of frugal businessman all Lenders should be considering (low LTV case too)?
At some point in their lives, many people will encounter some form of debt, whether that be a large amount or a small amount. Sometimes due to personal circumstances, this can spiral way out of control. When this happens, it can feel that once you have paid all your bills at the start of the month, you have very little disposable income left for yourself, if any at all.
A possible solution for customers, a way out if you will, is a debt consolidation Remortgage in Manchester, as we explore here in this case study.
Claire was a divorcee living on her own after her children had moved out to start their own lives. Post-divorce, her debt had started to accumulate with legal bills and increased gradually over the years, having to live on one income with unreliable maintenance from her ex. One day her daughter discovered she was pregnant, but as she was still young she too was struggling a little. As any loving parent would, Claire tried her best to financially support her daughter, despite not really affording to do so.
Luckily Claire had paid her mortgage off a number of years ago so that asset was there to potentially borrow against. Her take-home pay was £1100 per month, and her credit commitments were taking up a vast majority of this amount.
She had not missed any payments on credit commitments, but she also had no emergency fund saved. Whilst Claire’s credit score wasn’t too bad, she was no longer able to obtain new zero% credit cards to transfer her balances. She was recommended to me to see if there were any options available out there to improve the quality of her financial life.
When I met Claire, she was feeling quite down, like she was at a real low point. She had cut back on all luxury spending, and it was evident that she was desperate to take ownership of her financial situation before it got too out of control and she ended up in a much worse position.
We took a look at the possibility of a personal loan, but the debts had mounted too high for that. Claire had no family members who were able to help and realistically, downsizing was not an option. After much discussion, we agreed the right way forward would be to remortgage the house to pay off the debts and reduce her monthly outgoings.
We managed to find a Mortgage Lender to meet Claire’s requirements, though due to her low income, finding a lender who would lend enough was a rather difficult task. We managed to get her an Agreement in Principle, but regrettably, when we submitted the formal mortgage application, the Lender declined it.
The reason the case was declined, was that the Underwriter who assessed the situation felt that because Claire had been using cards to pay off other cards and then not closing down her old card accounts. When she had transferred balances, there was a high risk that she could re-offend and rack up debts once again.
Claire was noticeably devastated. She understood the concerns, but in her eyes, she had accepted she had a problem, and by engaging us had taken a positive step to getting her life back on track. She felt their risk was minimal – the loan to value was under 40%, she had never missed any payments, and if the remortgage was successful, she could be £500pm better off, which is a significant difference.
Whilst the above may very well be correct, customers may not always appreciate that the possibility of taking a property into possession is the last thing a Lender wants or needs to do. It reflects poorly on the numbers they are required to report each year. In the unfortunate event of repossession, they have the considerable hassle of securing the property, ensuring it, marketing it, selling it, and paying the surplus of equity (if any) back to the previous owner, which in this case would be Claire.
As such, if there is reasonable doubt, then an Underwriter has the discretion to decline an application, even if it is within their own published lending criteria.
Our dedicated and experienced Mortgage Advisors in Manchester pride ourselves on getting our recommendation right the first time, but this one didn’t work out that way due to the Underwriter’s adverse comments at the full application stage. However, we knew this remortgage wasn’t as risky as the Lender had made out, and it ought to be the appropriate outcome for her.
Claire perhaps felt like she wanted to give up, but we went back to the drawing board to find a different Lender that would accept her. Sure enough, we found one. Armed with the information we had from the previous Lender, we were able to provide better supporting comments for this hopeful second chance. Luckily this time, it was successful!
Claire didn’t just throw herself into this. She has now secured debt that was previously unsecured and may end up paying back more interest overall, depending on how quickly she can get the mortgage paid off over the course of her term.
However, in the short term, this has worked a treat for her. She now has had the burden of debt relieved from her shoulders, her credit score has improved, and she can save some more money each month.
The savings we were able to help her make amounted to over 50% of her net take-home pay monthly and it has changed her life. Upon completion of the remortgage, Claire cut up all her credit cards except one to use in emergencies only, and she has now got her financial life back on track.
If you are like Claire struggling with debt but are a Homeowner with equity please contact us to discuss your options, ideally before the situation gets out of hand. The earlier you take back control of your finances the better you will feel about things. Our Mortgage Broker in Manchester can offer debt consolidation Remortgage Advice in Manchester & surrounding areas.