Case Study: Using the wealth in your property to reduce your monthly bills

by Adam Tovey – Director | Independent Mortgage & Protection Adviser @ Prism Mortgage & Protection Advice

We’re all feeling the pinch of rising prices and many of our customers are understandably concerned about their future monthly mortgage payments, given the extensive media coverage around spiralling interest rates.

Here’s a constructive angle…

Client Background:

I assisted one young family purchase their first home together around eighteen months ago.  The property needed work to bring it up to their standards and they had funded this with loans and credit cards.  They had accumulated around £30,000.00 in debt over the eighteen month period.

Customer Objective & The Challenges:

We picked up around six months in advance of the expiry of their current rate to establish their options.

Armed with all of the information they required, the couple’s main priority was to use some of the equity from their (now more valuable) home to repay their loans and credit cards, with the aim of reducing their monthly outgoings.  However, we faced a number of challenges as Mortgage Lenders have specific and differing policies where customers:

• Have a variety of income sources in addition to their salaried / earned income – such as income from the State (Child Benefit, Universal Credit / Tax Credits and Disability Living Allowance, for example) and Maintenance income relating to children
• Have high levels of debt, compared to their total annual household income – commonly referred to as Debt to Income Ratio
• Have missed payments in the past or have less than perfect credit records
• Want to use some of the wealth in their property to pay off loans and credit cards – commonly referred to as Debt Consolidation

The Solution:

I completed a full fact find with my customers, gathering current information and documentation, paying particular attention to:

• Their various income streams
• Each loan and credit card
• Their credit reports

I then reviewed the whole of the market and discussed the case with a number of relevant Mortgage Lender Area Managers.  There were reasons why my customers were where they were – and the improvement works meant it was likely that the property had increased in value.  We needed a Mortgage Lender to take a human approach, as opposed to merely punching the details into a computer.

The Outcome:

Though my customer’s circumstances did not fit on paper with a mainstream lender, as Advisers of many years – with an array of industry partners – having access to decision-makers meant that we were able to negotiate terms.

We secured sufficient borrowing to remortgage and consolidate all of the loans and credit cards – some of which carried interest rates of over 35% – with a mainstream lender offering market-leading rates.

By using some of the wealth in their home to pay off their loans and credit cards, we were able to reduce my customer’s monthly outgoings by approximately £1,000.00 a month.

Needless to say, in the current climate and with a young family – this is a life-changing sum.

Conclusion:

Our property values boomed after the pandemic – many of our customers are making the wealth they have tied-up in their properties work harder for them during these challenging times by consolidating loans and credit cards and reducing their monthly outgoings.

Book an appointment to talk with us if you want to explore options to reduce your monthly outgoings.