Client’s Situation

Our clients were in their mid 40s with no children and in well paid jobs with a joint income approaching £80,000 per year.

Their property was valued at £400,000 with an interest-only mortgage of £210,000 outstanding which was due to end in 7 years. The clients’ only way of repaying the mortgage was the sale of the property.

They had various personal loans and credit card debt totalling £30,000.

All payments were up to date with no payments missed.

The personal loans were gradually reducing; however, the remainder of the credit cards and mortgage were not as the mortgage payments only covered interest and the minimum payments to credit cards mainly covered interest with very little capital repayment.

The clients contacted us after their existing lender would not consolidate their debt and allow them to switch to a repayment (capital & interest) mortgage.

The Problem

You might imagine that most lenders would be falling over themselves to offer these clients a re-mortgage as they had a good joint income, a good payment history and a property worth £400,000.

However, you would be wrong. Lenders will normally lend for what is called debt consolidation (i.e. repaying loans and credit cards) but not on this occasion because they felt the unsecured debt was historic and had built up over a long period of time.

This left our clients in a catch 22 situation:

  • lenders would not re-mortgage the outstanding mortgage because the payments to the personal loans and credit card companies were counted as outgoings and this meant they failed the lender’s affordability criteria
  • new unsecured personal loans would only be repayable over a maximum 7 year period which meant that any new loan payments were outside the clients’ budget
  • a second charge loan would repay outstanding debt but leave the existing mortgage on an interest-only basis.

The Solution

After researching the market we found a lender willing to manually underwrite the mortgage application and to consolidate the debts and switch the new mortgage of £240,000 on to a repayment (capital & interest) basis over a 20 year term.

The lender offered a free standard valuation and a free legal service and their arrangement fee was added to the mortgage at our clients’ request.

The clients have no need to worry about personal loan and credit card payments and they have the repayment (capital & interest) mortgage they wanted all within their stated monthly budget.

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 and unsecured personal loans) 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.


The clients now have their mortgage on a repayment basis so don’t have to worry about selling the property and now have no unsecured debt. They also have the option to make over payments upto 10% per annum to reduce the mortgage balance which the intend to do.

We Can Help

With our combined 70 years’ experience in the financial sector, please give us a call on 0161 706 0242 or complete and send the Contact Us Form and let us help you through the mortgage process – we are sure you will not be disappointed.