CLIENT’S SITUATION
Manchester Mortgages received a phone from a potential client asking us to review their Buy to Let mortgage and existing credit commitments.
The client was in their mid 40’s, living with their partner along with their 12 year old daughter in Didsbury.
Client employed with a salary of £36,000 per year.
Client had a joint mortgage with £ 175,000 outstanding with her partner on their residential home in Didsbury but also owned a property in Stockport in their own name which was rented out with a Buy to Let mortgage outstanding.
The rented property was worth £ 200,000 with an existing interest only mortgage outstanding of £57,000 with Alliance & Leicester which only had 18 months remaining on the mortgage term.
Clients had £36,000 outstanding on various credit cards
With the monthly Buy to Let mortgage payments and minimum monthly credit card payments the client was paying £1,000 per month and the credit card balances were not reducing.
All payments were up to date with no payments missed.
THE PROBLEM
The existing Buy to Let mortgage finished in 18 months time.
As the client wanted to keep the property it would have to be re-mortgaged otherwise the only other way of repaying the mortgage would be to sell the property.
The existing lender Alliance & Leicester no longer offered mortgages.
Client had £36,000 outstanding on credit cards.
Most Buy to Let lenders will not lend for personal debt consolidation.
This case did not fit the majority of Buy to Let lenders criteria because of the large amount of personal debt being consolidated.
Clients were also willing to extend their mortgage term to 25 years to achieve their monthly budget of £ 460 per month.
THE SOLUTION
As Manchester Mortgages are a whole of market / independent broker we were able to research the Buy to Let mortgage market and recommended that client re-mortgaged to a new lender and increase their mortgage to £93,000 which included repaying existing mortgage and all their existing credit card balances.
After fully discussing clients requirements Manchester Mortgages recommended a 2 year fixed rate at 3.29% with Kensington over 25 years on a repayment ( capital & Interest ) mortgage with payments of 460 per month – a whooping reduction of outgoings of £540 per month.
The lender offered a free standard valuation and free legal fees via their nominated solicitor along with no arrangement fees.
Clients now have only one payment per month and do not have to worry about credit card payments and know exactly where they are up to with their finances.
Manchester Mortgages also provided client with the monthly costs on how to make overpayments to reduce the mortgage term to 15 or 20 years.
THE DISCLAIMER
Clients were made fully aware of the implications of transferring short term loans to long term commitments and although they were reducing their immediate outgoings over the new mortgage term, in the longer term the total charge for credit was likely to be higher.
In addition by transferring unsecured borrowing (such as credit cards ) on to a secured basis they were potentially placing their home at a greater risk in the event of mortgage payments not being maintained for the term of the mortgage.
CONCLUSION
With their new Buy to Let mortgage payments and credit card balances repaid client is seeing the benefit of their £ 540 per month savings and are now enjoying stress free finances for the first time in many years.
Also the Buy to Let mortgage is now on a repayment ( capital & interest ) basis and client can see the mortgage amount owing decreasing on a monthly basis.
If you have an existing mortgage and outstanding loans or credit card balances or wish to improve your property give MANCHESTER MORTGAGES a call on 0161 706 0242 to see if we can make a difference to your mortgage payments.
