Paying off debts and raising money through remortgaging
In this post we discuss the benefits a Manchester couple had when they re-mortgaged their Wythenshawe house in order to pay off debts and raise additional funds.
Our Client’s Situation
Manchester Mortgages arranged the mortgage in 2017 for our then new clients to purchase their first home together in Wythenshawe. They purchased their property for £145,000 with a 90% mortgage from Coventry Building Society with a two year fixed rate over a 35 year term on a repayment ( capital & interest ) basis.
We at Manchester Mortgages always diarise to contact our clients to review their mortgage requirements towards the end of the fixed rate and to review their circumstances
After two years our client’s fixed rate was coming to an end in a couple of months, with the having £126,000 of their mortgage outstanding. Both clients are in their mid 30’s, employed with no children and looking to raise funds to repay £ 10,000 of credit card balances ( having spent these funds on the property over the last two years ) and if possible find another £8,000 for a new kitchen.
Remortgaging in Wythenshawe was the solution
Our clients were in the position of having bought in one of the country’s property hotspots over the last two years as the area of Wythenshawe has benefited from the ever increasing effect that the growth of Manchester Airport is having on the area along with the tram system which has become fully operational over the last 4 or 5 years.
Working on the basis that they had £126,000 mortgage outstanding and wanted to raise £10,000 to repay their credit cards and £8,000 for a new kitchen a new mortgage of £144,000 was required.
Manchester Mortgages researched to see if their existing lender ( Coventry ) would be able to assist with the higher mortgage required but the requirements did not meet the lenders criteria so Manchester Mortgages recommended and arranged a re-mortgage to Virgin Money.
Virgin Money offered 2, 3 or 5 year fixed rates ( client’s preferred a fix rate so that their mortgage payments were known ) and chose the 3 year fixed rate and as the property now valued up at £160,000 the full £144,000 ( 90% ) was raised meaning the credit cards were repaid and the funds were available for the new kitchen.
The Virgin Money re-mortgage offered free valuation and free legal services from lenders nominated solicitor and the rate chosen did not have any lenders arrangement fee payable.
The re-mortgage was taken on a repayment ( capital & interest ) basis on the remaining term of the previous mortgage of 33 years.
Our 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.
When arranging the re-mortgage Manchester Mortgages also reviewed our client’s protection of the mortgage and arranged life policies to protect the higher mortgage amount and also arranged Income Protection for one of our clients as their sickness arrangements with their employers meant they were only paid full pay for 4 weeks if off work due to sickness or accident
With their new mortgage on their Wythenshawe house our clients have been able to repay their credit card balances and look forward to planning and choosing their new kitchen and sleep safely knowing their mortgage payments are fixed for the next of 3 years.
Also their mortgage is protected in the event of either death with one of the clients now having valuable income protection in the event of accident or sickness.
We look forward to our clients next review in 3 years time or sooner if their plans change.
If you have an existing mortgage and outstanding loans or credit card balances or wish to improve your property or review your mortgage and income protection please give MANCHESTER MORTGAGES a call on 0161 706 0242 to see if we can make a difference to your mortgage.