Purchasing a new home during a significant life transition, such as a divorce, can be challenging. This case highlights how we helped a home mover in Farnham secure a tailored mortgage that offered stability and aligned with their financial goals.
The Scenario
The customer was divorcing and selling their marital home, resulting in £340,000 from the equity split. They planned to use these funds to purchase a terraced house in Farnham, requiring an additional £40,000 mortgage to complete the purchase.
The customer’s preferences included:
- 5-Year Fixed Rate: They wanted payment security over the next five years, avoiding potential refinancing costs and ensuring peace of mind.
- Capital Repayment Basis: A repayment mortgage was chosen to ensure the loan would be fully paid off by the end of the term.
- Short-Term Loan: A five-year mortgage term was selected to repay the loan as quickly as possible while staying within budget.
The customer was flagged as vulnerable on the register due to the divorce; however, they confirmed they were fully capable of making financial decisions. Protection options were discussed but deferred for review closer to completion.
The Challenge
The main challenges included:
- Affordability and Short Term: Structuring a short-term loan that remained within the customer’s budget.
- Fee-Free Product Preference: Finding a mortgage product with no valuation or product fees to minimise upfront costs.
- Vulnerability Considerations: Ensuring the customer felt supported throughout the process while addressing their unique circumstances.
The Process
Step 1: Understanding the Customer’s Needs
We conducted a detailed consultation to understand their financial situation and goals. Their priorities of a short-term, affordable, and secure mortgage guided our recommendations.
Step 2: Researching Suitable Lenders
After evaluating several options, Coventry Building Society was identified as the ideal choice. They offered a competitive rate, a 5-year fixed product, and no product or valuation fees, meeting the customer’s preferences.
Step 3: Structuring the Mortgage
We structured the mortgage as a capital repayment loan for £40,000, with a 5-year term and a fixed rate. This setup ensured affordable monthly payments while allowing the loan to be repaid in full within the desired timeframe.
Step 4: Simplifying the Application
To ensure a smooth process, we managed all aspects of the application and provided guidance tailored to the customer’s circumstances. Protection options were scheduled for review once the mortgage offer was issued.
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The Solution
Coventry Building Society provided a mortgage product tailored to the customer’s needs:
- Loan Amount: £40,000
- Product Type: Capital Repayment Mortgage
- Rate: Fixed for 5 years
- Term: 5 years
- Fees: No product or valuation fees
This solution provided stability, affordability, and the ability to repay the mortgage quickly.
Why This Solution Worked
- Predictable Payments: The fixed rate ensured consistent payments, supporting budgeting and financial stability.
- Short-Term Facility: The 5-year term allowed the customer to repay the loan efficiently while staying within budget.
- Cost Savings: Fee-free options reduced upfront costs, aligning with the customer’s financial preferences.
The Outcome
The customer successfully secured their mortgage, enabling them to purchase their new home and move forward with confidence. Key benefits included:
- Affordability: The short-term, fee-free mortgage offered financial peace of mind.
- Stability: Fixed payments ensured consistency over the next five years.
- Goal Alignment: The mortgage structure supported their plan to repay the loan quickly while staying on budget.
Closing Thoughts
Securing a mortgage during a life transition requires understanding, support, and tailored advice. This case highlights the value of a proactive approach in addressing unique circumstances and achieving financial goals.
If you’re navigating a significant life change and need a mortgage solution that works for you, contact us today.
We’re here to provide expert guidance and ensure you secure the best outcome for your situation.
