Remortgage at end of fixed term, adverse credit

rtwodtwo

I have just come to the end of a 2 year fixed term with my mortgage provider, which is one of the largest in the UK.

During the fixed term and since the beginning of the mortgage relationship over a number of years I have always paid the mortgage on-time. I also bank with the mortgage provider and accounts are managed well, with monthly salary payments and no unauthorised overdraft. I have a sizeable overdraft facility available, which I use partially from time to time but other than that no further credit with the bank and only maintain a further savings account with them.

I have recently attempted to remortgage with them at the end of the 2 year fixed term and despite the fact they offer multiple products and publicly state lower rates for existing borrowers, I am only being offered the standard variable rate that is increasing my monthly mortgage payments substantially. They state the reason for this is due to Risk profiling and i'll explain the possible background further down.

The facts with my mortgage / property /status are -

- approx 55% LTV
- 21 years remaining from original 25 year term
- full time employed, higher rate tax
- always paid mortgage on time and bank with mortgage provider (no issues)

Adverse credit:

Within a year of signing up to the 2 year fixed term, my business failed and as a result I had personal guarantees on multiple loans/ credit cards that were called in. I negotiated with each and all either partially settled using equity from a B2L house sale and those that I could not pay through a PS settlement I have ongoing agreements, although on my credit file they appear as defaults. None of these are with my mortgage provider / existing bank, or their subsidiaries.

As a result of the above, my options to remortgage elsewhere are presumably limited and I faced with a position of having to pay a substantially higher standard variable rate. The perverse effect of this is that the mortgage lenders decision to only offer a svr will make the mortgage that much harder to pay, so their risk profiling and in ability to offer me a product to lower the rate / monthly payments could ultimately lead to a mortgage default scenario in the future.

No doubt there must be quite a few people in a similar position coming to the end of their fixed terms, so it appears no matter how well you manage the relationship with your mortgage provider keeping them 'priority' creditor through thick and thin, when it comes to the crunch they simply decide to turn their back and squeeze you for as much money as possible.

Any advice from those who have been in a similar position or mortgage brokers with experience in managing similar scenarios would be much appreciated. Thanks.

Thrugelmir

The only relationship between you and a lender is financial. Its a business relationship. Paying on time is the contractual agreement. This doesn't earn you brownie points. From your lenders perspective your risk rating has increased. Hardly surprising given the circumstances you've outlined.

Highly likely that the UK economy will struggle for time yet. So lenders are still tightening the risk criteria even now.

So decisions are totally yours. Downsizing/buying a cheaper property being one for example.