Scenario
Recently, a couple contacted us hoping to raise a £60,000 loan. They had experienced some difficulty in finding an unsecured loan for two reasons.
Firstly, the size of the loan was a problem because the majority of unsecured lenders have lending limits of £25,000 maximum. Secondly, their low credit score presented a problem which reflected the constant use of their credit cards. Unfortunately, this has a negative impact on your credit score.
Over time, they had built up a significant amount of credit which resulted in them owing 16 creditors through a mixture of credit cards, loans and bank overdrafts. Their current monthly creditor outlay was almost £1,700 per month. Not only was this a burden from a financial point of view but also from the time spent reading and responding to 16 statements and making 16 separate payments. All this before they could consider their domestic bills and mortgage. Obviously, the ideal situation was for them to consolidate all the creditors into one loan and one payment.
The couple had a mortgage of £138,000 against their property valued at £330,000. Their mortgage was tied into a fixed interest rate with a penalty for early repayment and their lender would not give a further advance because of their poor credit score.
Solution
Solution Mortgages found them a secured loan at a variable rate of 5.34% over a 14-year term with a payment of £534.93 per month giving a monthly saving of £1,165 per month. It not only released their financial burden each month but also the time and worry of managing 16 separate items of credit.
The 14-year loan obtained was over the same term as their mortgage. Once their mortgage fixed rate is out of its penalty period we will review the payments and combine both the mortgage and loan together for the remaining term. It results in a saving on both the monthly payment and on the total interest payable over the whole term.
If you are looking to save money and release the pressure on your finances, call us today on 0800 0356443. Our dedicated advisers are waiting for your call.
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