A question for brokers regarding remortgage for debt consolidation

anfieldred · 3 April 2018 at 9:30AM

Hello,

I'm looking for a reply from any brokers on here if possible please.

I've got a mortgage that I've had for 4 years at about 72% LTV (depending on the valuation), and am looking to remortgage to try and clear some debts. By taking out £20k I could 'free up' around £950 a month (from loans, card payments etc.). I'm aware that I'll be repaying over a longer period, but don't really see another way out at the minute.

The problem is, as I've got a high amount of debt (around 30k), I get that lenders won't be keen on taking this on - also, my credit score isn't great due to the debt I have. If I borrow an additional 20k, this would take my LTV to around 82-83.5% again depending on the valuation.

My question is, do brokers have lenders that will take this on/have you had much success with something similar in the past? I get that there's no 100% guarantees and I can't hold my own broker to it, but I'm bothered that I'll fail a final credit check and fail at the final hurdle - how likely is it that I can actually remortgage?

I've looked at additional borrowing but can only go to to 80% LTV (with Halifax currently), so my broker is looking at other lenders, but how likely is it that it can actually go ahead?

Any information is appreciated - if it's likely to be a no-go that's fine, but would be keen to hear any success stories you've had with remortgaging for debt consolidation.

Thanks
AR

ACG · 3 April 2018 at 9:44AM

There are lenders who will go to 85% an even 90% LTV for debt consolidation at normal rates. You say you have bad credit because of debt, having debt is not a problem. It is only a problem if you are paying late or missing payments.

If you do have bad credit, you could look at doing a second charge loan. That would mean keeping your current mortgage with Halifax and then a top up mortgage with another lender.

Your broker can go through the figures and determine which would be cheapest. It will likely be a remortgage but if you do have bad credit, it could be cheaper to keep your current mortgage on the high street and then go down the second charge route.

anfieldred · 3 April 2018 at 9:50AM

Thank you for the quick reply ACG. I've had 3 late payments in about 4-5 years, and 2 were in January although am disputing one of them.

I have looked at second charge loans, but the payments were coming out at around 350-400 p/m (admittedly this is a lot less than I'm paying now), whereas initial figures from online calculators were looking at around £100-150 if through remortgaging.

If I could get to around 87% LTV I could 'free up' around £1200 in payments each month, whereas at 82% it's around £950, so it definitely makes sense to try and get it on the mortgage if I can as it's a significant amount of money that wouldn't be paid out every month. I'm just concerned it's going to get rejected - I know a broker can only do so much in the sense of finding & recommending the product, then it is up to the lender to decide if they want to go ahead or not.

anfieldred · 10 April 2018 at 10:34AM

Bumping this one rather than starting a new thread - explained & sent everything to my broker, and they said to go with Natwest and it was rejected at the first stage.

Where do I go from here? I read on whichmagazine that Cambridge BS consider bad credit applicants, however on their site is says only for that region (am based up north).

Does anyone know of any specialist lenders that may take this on/would be worth applying for?

Thanks
AR

pepperpop · 10 April 2018 at 5:48PM

We are in a similar situation - applied to accord via broker on brokers recommendation. Was rejected "too higher debt in income ratio" We were told by broker - didn't really understand as we would be clearing all the debt, he is now trying with clydesdale we await their decision and then we've no idea what to do if they decline.

Thrugelmir · 10 April 2018 at 6:23PM

pepperpop wrote: »

didn't really understand as we would be clearing all the debt,

Debt consolidation provides the answer not the solution. You are not clearing the debt. Merely deferring repayment over a much longer time frame. Which initself exposes both you and the lender to increased level of risk. Mainstream lenders are reluctant to convert unsecured debt to secured debt for a variety of reasons. Primarily that the majority of people subumb to further financial issues at a later date. 2nd charge secured lending therefore provides for lenders a better commercial proposition that reflects the risks involved. Alternatively there are the primary mortgage lenders that specialise in underwriting poor credit business.

pepperpop · 10 April 2018 at 7:27PM

No its not a solution as such i agree, i want to take responsibility for the debt we have and pay it back unfortunately it would take years and years. I am interested in looking at the primary lenders that specialise in underwriting poor credit business and if need be perhaps 2nd charge - do you have an idea of who to approach if we need to? I have made many changes to our lifestyle over the last couple of years selling on eBay cutting food costs no holidays lease car being returned etc etc, but we are not making any dent in our debt due to the interest on cards and as they are close to their limits we cannot get 0% cards. I have produced a very detailed budget for the next 10 years which (if we can remortgage the unsecured debt enable us to make overpayments on our mortgage and try and pay this additional lending off quicker. Any advice much appreciated

feekerry · 10 April 2018 at 8:03PM

Hi

We did something similar recently. We also desperately needed to extend the house and do some improvements. My credit history was much worse than yours! We went to 85% ltv. Wasn’t a high st lender but rate was less than 3%. Our debt was higher than yours too. We even managed to reduce our mgt term in the process. We can save for the first time in years and will be using it to over pay the mortgage. I feel very different about money and debt now and it’s changed my behaviour towards it.
You need a really good broker.

anfieldred · 11 April 2018 at 12:11PM

feekerry wrote: »

Hi

We did something similar recently. We also desperately needed to extend the house and do some improvements. My credit history was much worse than yours! We went to 85% ltv. Wasn’t a high st lender but rate was less than 3%. Our debt was higher than yours too. We even managed to reduce our mgt term in the process. We can save for the first time in years and will be using it to over pay the mortgage. I feel very different about money and debt now and it’s changed my behaviour towards it.
You need a really good broker.

Thanks for the reply, and glad you got sorted. Hopefully I can too - as daft as it sounds, if it goes ahead I can free up nearly 2x more than what I'm paying on my mortgage currently.

Do you mind me asking who your lender was please?

anfieldred · 11 April 2018 at 12:44PM

So my broker has got in touch and says they're trying Clydesdale, however upon looking at https://help.cybonline.co.uk/system/selfservice.controller?CMD=VIEW_ARTICLE&ARTICLE_ID=14330&CONFIGURATION=1113&PARTITION_ID=1&USERTYPE=1&LANGUAGE=en&COUNTRY=us, it says they only go up to 80% LTV...will the broker be able to get a different rate from what's on the site?

feekerry · 11 April 2018 at 12:53PM

It was Kensington but as I say my credit history was much worse than yours

A question for brokers regarding remortgage for debt consolidation

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