Referral to second charge firm enable clients to significantly reduce monthly repayments on credit cards and personal loans

Trinity Financial recently helped to arrange a second charge mortgage for two of our clients with a large amount of personal debt.

 

Their fixed rate mortgage was about to finish and they want to restructure their debt. Over the years they had taken out credit cards, store cards and personal loans and the debt value totalled more than their combined annual income.

 

Our broker looked for ways to complete a debt consolidation mortgage and approached the lenders offering up to 5.5 times salary, but he could not get the application through because of the amount of debt.

 

 

The solution was to arrange a product transfer without the need to change their existing mortgage lender, so the mortgage did not revert on to a standard variable rate. Our broker then referred them to our specialist second charge partner.

 

The second charge firm arranged a fixed rate deal enabling our clients to repay all of the credit cards, loans and store cards while raising a small amount for home improvements. The monthly unsecured debt repayments reduced from nearly £3,500 to £1,250.

 

The savings were so significant because the credit cards were not on 0% rates and the loans were on average interest rates.

 

An additional benefit meant the borrowers could overpay up to £499 each month to reduce the interest payments and bring down the outstanding balance even further.

 

 

Existing mortgage: £500,000

Second charge value: £150,000

Second charge rate: 5.79% fixed rate for 24 months.

Reversion rate: The reversion rate is currently 5.49% - this is 4.74% over the Bank of England base rate currently 0.75%.

Lender’s arrangement fee: £1,895

Mortgage term: 20 years

Repayment type: Capital repayment.

Loan-to-value: 50%

Early repayment charge: Early repayment charges apply for two years.

Overpayments: Up to £499 each month without charge.

Representative example: An interest mortgage of £150,025 payable over 20 years, initially on a 5.79% fixed rate for two years, and then on a variable rate of 4.74% over the Bank of England base rate (giving a current pay rate of 5.49%) for the remaining 18 years, would require 24 monthly repayments of £1,042.64 followed by 216 monthly repayments of £1,019.41. The total amount repayable would be £245,925.92 made up of the loan amount and £1,895 (product fee), £30 (final repayment charge), £300 (completion fee). The overall cost for comparison is 5.96% APRC representative.

 

The actual rate available will depend on your circumstances. Please ask for a personalised mortgage illustration.