Refinancing a buy-to-let property can present challenges, especially when adverse credit and limited income are factors. This case highlights how we helped a landlord in Chorley secure a tailored remortgage solution to address existing debts and achieve long-term financial stability.
The Scenario
Our client owned a buy-to-let property in Chorley and was looking to refinance their mortgage. They had several clear objectives for this remortgage:
- Debt Consolidation: The client wanted to raise additional funds to pay off significant credit card debt, reducing financial stress and monthly outgoings.
- Long-Term Stability: A 5-year fixed-rate mortgage was preferred to avoid frequent refinancing and additional fees.
- Minimised Costs: The client sought a mortgage product with no lender fees, as well as free valuation and legal services, to keep upfront costs low.
- Interest-Only Product: This would allow the client to manage cash flow effectively while planning for their financial future.
However, the client faced considerable obstacles. Their income came primarily from maintenance payments and universal credit, with no trading income from their recently established limited company. Additionally, their existing credit card debt posed a challenge, as it required a lender willing to consider their plan to repay the debt immediately after refinancing.
The Challenge
The key challenges included:
- Limited Income: The client’s income consisted solely of maintenance payments and universal credit, making it difficult to meet the minimum income requirements of many lenders.
- Adverse Credit: The significant level of credit card debt created a potential hurdle, as many lenders may view this as a high-risk factor.
- Specific Product Requirements: The client’s preference for a fee-free product with additional incentives, such as free legal services, further narrowed the pool of suitable lenders.
- Debt Repayment Plan: Ensuring the lender was comfortable with the client’s intention to repay credit card debt immediately after securing the remortgage.
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The Process
Step 1: Understanding the Client’s Goals
We started by understanding the client’s financial situation, goals, and preferences. Their primary concern was consolidating debt and securing a manageable, long-term mortgage solution. This insight helped us tailor our approach to their unique needs.
Step 2: Identifying Suitable Lenders
Using our extensive network, we identified lenders that could accommodate the client’s limited income and credit history. We focused on those offering buy-to-let mortgages without a minimum income requirement and products that aligned with the client’s preferences, such as free valuation and legal services.
Step 3: Lender Engagement
We approached Accord Mortgages, a lender known for flexibility in complex cases. By leveraging our relationship with Accord, we presented a comprehensive overview of the client’s financial circumstances and goals. This included highlighting the plan to repay credit card debt upon completion of the remortgage.
Step 4: Underwriting Support
We worked closely with Accord’s underwriting team to address any concerns about the client’s credit history and income. By explaining the client’s proactive plan to improve their financial position, we reassured the lender about the viability of the application.
The Solution
After careful negotiations, Accord Mortgages offered a remortgage solution that perfectly matched the client’s needs:
- Loan Amount: £62,500
- Product Type: Interest-Only Mortgage
- Rate: Fixed for 5 years
- Additional Incentives: Free valuation and legal services, with no lender fees
This solution provided the client with financial stability and the means to consolidate their credit card debt.
Why This Solution Worked
- No Minimum Income Requirement: Accord Mortgages’ criteria allowed the client to qualify despite their reliance on maintenance payments and universal credit.
- Debt Repayment: The raised funds enabled the client to immediately repay their credit card debt, reducing monthly outgoings and financial stress.
- Savings: The fee-free product minimised the overall cost of refinancing, making the process more affordable.
- Stability: The fixed-rate mortgage ensured consistent payments over five years, giving the client peace of mind.
The Outcome
The successful remortgage allowed the client to achieve their financial goals. Key benefits included:
- Consolidate Debt: The client could pay off their credit card debt in full, simplifying their finances.
- Cost Savings: The absence of lender fees and the inclusion of free valuation and legal services saved the client significant upfront costs.
- Stability: The 5-year fixed rate ensured predictable monthly payments, providing long-term financial security.
Client Feedback
The client expressed immense satisfaction with the outcome, praising our ability to navigate their complex circumstances and secure a tailored solution. They emphasised how relieved they felt to have their credit card debt resolved and their finances back on track.
Conclusion
This case demonstrates the importance of creative problem-solving and strong lender relationships in overcoming financial obstacles. By carefully tailoring a solution to meet the client’s unique needs, we ensured they could refinance their property, consolidate their debt, and achieve long-term stability.
If you’re facing challenges with buy-to-let mortgages, adverse credit, or other complex financial situations, our team is here to help. Contact us today to explore your options and secure a solution that works for you.
