In this post we look at a couple who remortgaged their Stockport home with Manchester Mortgages and saved themselves over £600 per month.
We received a phone from potential clients asking us to review their mortgage and existing credit commitments.
The clients were in their early 50’s, married with one child age 15, both employed with a salary each of around £25,000 per year.
Their property was in Stockport and was worth £ 190,000 with an existing repayment mortgage with Nationwide which had £ 80,000 outstanding with 13 years remaining – their existing fixed rate had recently expired and they were paying lenders standard variable rate of 4.24% which was costing £ 660 per month.
They had 4 credit cards with balances of £ 20,000 outstanding for which they were paying in total £ 600 per month and had a second charge on their property for £15,000 which was costing £ 230 per month.
Including the mortgage the cost for all of the above was £1,490 per month and in total they owed £ 115,000.
All payments were up to date with no payments missed.
Because the credit card payments mainly covered interest the balances reduced with very little capital repayment.
Clients also wanted to raise £10,000 for much needed home improvements.
Our Stockport clients were left in a position every month of seeing their monthly salary credited to their bank account only to see it go out as the above payments went out along with daily living expenses.
A new unsecured personal loan would only be repayable over a maximum 7 year period which meant that any new loan payments would be outside clients monthly 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.
This case did not fit the majority of lenders criteria because of the large amount being consolidated.
Our clients wanted to get their monthly budget to below £900 per month.
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 £125,000 which included repaying existing mortgage, second mortgage and all their existing credit card balances and raise £10,000 for home improvements.
After fully discussing clients requirements Manchester Mortgages recommended a 5 year fixed rate at 1.96% with Accord Mortgages over the remaining mortgage term of 13 years which reduced the mortgage payments to £ 890 per month – a whooping saving of £ 600 per month.
The lender offered a free standard valuation and free legal fees via their nominated solicitor along with no arrangement fees.
Therefore clients now have only one payment per month and do not have to worry about second charges and credit card payments and know exactly where they are up to with their finances.
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.
With their mortgage payments reduced our Stockport remortgage clients are seeing the benefit of their £ 600 per month savings and are now enjoying stress free finances for the first time in many years and have implemented their home improvements around the house.
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.