A (kind of) success story with a lot to overcome

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This story is a little different to the others we usually post.

I think this was a good outcome, the customer was not completely impressed but I think it is good to share these stories and you can also see what your thoughts are on the outcome.

The situation

We have a customer who was self employed but had recently sold the business and become an employee. The customer only had 1 payslip of the new job, this ruled out a few lenders.

The customer’ mortgage was with a lender which no longer existed, they were on the variable rate which had a high interest rate. They also wanted to consolidate a not so insignificant amount of debt into the new mortgage. On top of that they also wanted to pull out some more money in order to build an extension. The customer also wanted a mortgage that went beyond on their 70th birthday, which was also their retirement age.

All in all, there was quite a bit to contend with on the application.

What we did

As ever, we went off to do the research. I was 100% committed to achieving what the customer wanted. I could see that once the new mortgage went through, the customer would be around £700 per month better off – even with the extra borrowing. It made complete sense to do what the customer wanted and believe it is the right thing.

The issue however was that there were quite a lot of issues to overcome and what we were finding was that at least one of the issues were ruling lenders out. Those issues were:

  • The debt was quite high for the income involved.
  • The change in job and lack of payslips.
  • Having a lot of debt and then also wanting to pull out an extra £100,000 for home improvements.
  • The mortgage going into retirement.

We came back with a couple of options.

The first was to do exactly what the customer wanted. The problem with this however was that although everything fit criteria, it was down to underwriters discretion and we were not confident with everything combined the underwriter would be happy to proceed. We discussed out concerns with the customer but they wanted to proceed.

Unfortunately it was declined as we thought might happen.

The second option was to remortgage the mortgage and consolidate the debt on to a better rate. The underwriter would then want to see between 6-12 months worth of mortgage payments to ensure the customer was no longer running up debt.

I thought this was a good happy medium, as it allowed the customer to get back on the front foot with everything and then we could go back to the same lender and ask for the additional money in order to do the extension, this would give the applicants time to apply for planning permission etc.

The customer was not happy with this and was a little offended that they were not being trusted. However eventually after speaking to the lender directly, they decided that it was the best option available and would still work albeit it might delay the extension a little.

The outcome

We will need to update this in 6 months time, however the key thing is that the customer is now on an interest rate which is around a third of what their previous mortgage was. They have been able to wrap up the debt they had into the mortgage which has lowered their monthly repayments significantly.

We can pick it up in 6 months time and confirm whether or not we were able to get the additional borrowing from the lender. However even if they are not prepared to lend the extra, we do have other options such as a secured loan etc.

I think we can class this as a Mortgage Success story, what do you think?