Debt Consolidation Remortgage Advice In Doncaster Case Study

Debt Consolidation Mortgage Advice in Doncaster

What is debt consilidation?

To a greater or lesser extent, some people will find themselves in debt. For whatever reasons, it can quickly turn into a dire situation. When you find yourself in these circumstances and have paid all your bills off at the beginning of the month, it can often mean there isn’t much disposable income left.

One option that some applicants may have the option of is a debt consolidation remortgage in Doncaster. As an open and honest Mortgage Broker in Doncaster, we’ll take a look at one of these in practice, via a case study.

Know Your Limits – This Will Help in the Long Term

Nicole was a divorcee who was living by herself, with her children having left home to start their lives. Her debt had started to gradually build its way up because of her legal bills after the divorce. This grew over the years, leaving her with few options outside of living on one income with unreliable maintenance from her ex-partner.

Sometime after, her youngest daughter became pregnant. As any loving parent would, she wanted to try her best to help her out financially, although it could be strongly argued that she wasn’t in the best position to do so.

Luckily by this point, Nicole had already paid off her mortgage years prior, so she had the property there as an asset to potentially borrow against. She was bringing home around £1,100 per month, and her credit commitments were taking up the majority of this income.

She always kept up her payments on credit commitments, but she had no emergency fund to rely on. Whilst Nicole’s credit score wasn’t as bad as it could’ve been, she was no longer able to obtain new 0% credit cards to transfer her balances.

One of Nicole’s friends recommended that she speak to a qualified Mortgage Advisor in Doncaster to figure out if there was any way that they could help to improve the quality of her finances, and by proxy, her life, this is where we came in. 

A Personal Loan isn’t Always the Easiest Option

When I spoke to Nicole, her mood was low and she wasn’t particularly motivated. She had cut back on all of her luxury spending, and it was abundantly clear that she was desperate to take ownership of her financial situation before it got any further out of hand.

Our team explored the possibility of Nicole taking out a personal loan, but her debts had crawled too high for that to work. Nicole had no family members who she could turn to for help and she wasn’t able to downsize. After much discussion, we agreed the right way forward would be to Remortgage in Doncaster on her property to pay off the debts and reduce her outgoings.

Reliability – A vital Trait for Lenders

After some searching, we managed to find a lender that was a right fit for Nicole’s requirements. It has to be said though, that because of her low income, it was rather difficult to find a lender who was willing to lend her enough. We managed to help her obtain an Agreement in Principle, but regrettably, when we submitted the formal mortgage application, it was declined.

The case was declined because the assigned Underwriter who was assessing their situation felt that Nicole had been using cards as a means of paying off her other cards and not then closing down the cards in question. When she had transferred balances, there was considered to be a high risk that this would keep occuring and she would rack up debts again.

Nicole was understandably devastated. She understood the concerns, but to her, she had accepted that she had a problem, and by getting in contact with us, she’d taken the best step forward to fixing her situation. To her, their risk was minimal – the loan to value was under 40%, she was reliable with her monthly payments, and if the remortgage was successful, she could have ended up an amazing £500pm better off.

All of the above may have been true, but unfortunately clients don’t always appreciate that repossessing a proper is the last thing a lender ever wants to do. It reflects poorly on the numbers they are required to report on a yearly basis. In the event of this happening, they have a major stress in having to secure the property, insuring it, marketing it, selling it, and paying the equity surplus (if any) back to previous owner of the property.

Because of these reasons, if there is reasonable doubt, then an Underwriter has the discretion to decline an application, even if the case technically falls within their published lending criteria.

Being Declined Doesn’t Mean Failure – Always Room for Improvements

We are proud of our hard work and always aim to get our recommendation right the first time, though this time it didn’t go as we’d hoped. This was due to the Underwriter’s adverse comments at the full application stage. That being said, we still knew that this remortgage wasn’t as risky as the mortgage lender had said it was, and that with the right lender on side, it would be the right path to take.

Nicole perhaps felt like she wanted to give up, but still we went back to the planning table and began the search for a new mortgage lender. Sure enough, we found one who fit what we needed. Utilising the information we had gathered from the previous mortgage lender, we were able to provide better supporting comments this time around and thankfully, our efforts were met with great success.

We’ll keep you on track after you’re back on track.

Nicole didn’t take this step lightly. In doing this, she has secured debt that was previously unsecured, though she may end up paying back more interest overall, depending on how quickly she can get the mortgage paid off.

On a positive note though, in the short term, this has worked out a treat for Nicole. She now has had the burden of debt firmly relieved from her shoulders, she has an improved credit score to her name, and she now has the ability to start saving a bit more money per month.

The savings we were able to help her make amounted to over 50% of her net take-home pay monthly, and it has drastically changed her life. Upon the completion of the remortgage, Nicole made sure that she cut up all of her credit cards except one to use for emergencies only and nothing else. After hard work and perseverance, her financial life is finally back on track.

Speak to a Mortgage Advisor in Doncaster Today

If you are like Nicole and are struggling to deal with debt, but are a Homeowner with equity, please do get in touch to discuss your options, ideally before the situation gets too far out of hand. We are available from early until late, all throughout the week.

Book your free mortgage appointment to speak with a Mortgage Advisor in Doncaster today. Why wait, the earlier you take back control of your finances and look into Remortgage Advice in Doncaster, the better your personal and financial life will be.

Date Last Edited: December 6, 2023