Back in 2018 Manchester Mortgages were contacted by new potential clients to review their mortgage and existing credit commitments.
They were both in their mid 40’s, both employed by the NHS with a joint income of £38,000 per year. They had 2 children aged 13 & 16.
Their property was in Middleton and was worth £95,000 with an existing repayment mortgage with Virgin Money which had £37,000 outstanding with 10 years remaining – they were paying their lenders standard variable rate of 4.59% with mortgage payments of £531 per month.
They had numerous loans and credit card balances outstanding totalling £33,000
for which they were paying £478 per month and along with their mortgage payments the cost for all of the above was £1,009 per month and in total they owed £70,000.
Clients were looking to reduce their outgoings to around £500 per month.
All payments were up to date with no payments missed.
The credit card balances were not reducing as the payments mainly covered interest with very little capital repayment.
One of the applicants had a Default registered against their name for over £7,000 in May 2015
Clients were also left in a position every month of seeing their monthly salaries credited to their bank account only to see it go out as the above payments went out along with daily living expenses.
The credit card balances left the client feeling that they were working just to pay the credit card bills and meant that they could not afford to spend money on the family.
A new unsecured personal loan would only be repayable over a maximum 7 year period which meant that any new loan payments was outside clients budget.
Clients wanted to repay all the above debt and consolidate it to one payment so they could then see what was left in their bank account each month and budget accordingly.
Clients were agreeable to extend their mortgage term to 20 years to achieve their monthly budget.
THE SOLUTION IN 2018
As Manchester Mortgages are a whole of market / independent broker we were able to research the mortgage market and recommended that clients re-mortgaged to a new lender and increase their mortgage to £70,000 which included repaying their existing mortgage and all their existing loans and credit card balances.
After fully discussing clients requirements Manchester Mortgages recommended a 2 year fixed rate at 5.29% with Precise Mortgages over 20 years which reduced the mortgage payments to £482 per month – a whooping reduction of outgoings of £527 per month.
The lender offered free legal fees via their nominated solicitor along with a £999 arrangement fee which was added to the mortgage.
Clients then had 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 reviewed their clients mortgage protection and income protection and clients took our advice and upgraded their cover which was easily afforded due to the above monthly savings.
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 existing mortgage term, in the longer term the total charge for credit was likely to be higher.
In addition by transferring unsecured borrowing ( 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.
With their mortgage payments reduced clients are seeing the benefit of their £527 per month savings and are now enjoying spending time and money with the family. house.
Manchester Mortgages contacted our clients prior to their Precise Mortgages mortgage expiring to discuss their requirements & circumstances.
They wished to capital raise £30,000 to improve their property with a new kitchen , bathroom, a new front door and improvements to their drive.
Their property was now valued at £130,000 and their existing mortgage outstanding was £65,000.
They wished to borrow £95,000 over the 17 years which was the remaining term of their mortgage.
The default from 2015 no longer showed on their credit report and as they had both maintained control over their finances each had a clear credit file meaning Manchester Mortgages could re-mortgage clients to a High Street lender.
Clients re-mortgaged to Nat West on a 2 year fixed rate of 1.50% which came with free legal services from lenders nominated solicitors, a free valuation and no arrangement fee.
Their new mortgage payments are £ 528 per month ( bearing in mind they were previously paying £531 per month to Virgin Money for a £37,000 mortgage and then £482 to Precise Mortgages for a £70,000 mortgage.
MANCHESTER MORTGAGES WILL ALWAYS DO THEIR BEST TO SOLVE YOUR IMMEDIATE MORTGAGE REQUIREMENTS BUT ALSO LOOK TO ADVISE YOU IN THE FUTURE
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.