Our clients moved into their property in late 2008, taking out a £336,000 mortgage secured against a property value of £465,000. They have significantly renovated the property since then, building a large kitchen extension. These works were funded using loans and credit cards to a total cost of £130,000.
The clients attempted to remortgage several times, both going direct to their lender and using another mortgage broker but were declined due to their credit score. They have no missed payments but their debt to income ratio was the issue, even though they used the debt to improve the property rather than for personal spending. They have a joint income of just over £100,000.
We were able to arrange a £446,000 mortgage for the couple against the enhanced property value of £625,000, enabling them to raise capital to consolidate their debts. The remainder of the unsecured borrowing was cleared using the proceeds of the sale of shares. The clients opted for a discounted variable rate of 2.99% (APR 3.1%* - the overall cost for comparison) with an offset facility and no early repayment charges.
The clients have much improved cash flow and making considerable savings as the unsecured credit card loans were at much higher interest rates than the secured loan that has replaced them. They are also paying a lower mortgage rate than before, so are saving there too.
The client paid an arrangement fee of £2,230 (0.5% of the £446,000 loan amount).
*APR (the overall cost for comparison) calculation based on a 20 year term, interest only mortgage with £2,230 arrangement fee, legal and valuation fees of £1,000. The actual rate available will depend on your circumstances. Ask for a personalised illustration.