The Client
The client called in to enquire about mortgaging his existing residential property, which he owned jointly with his mother. During the fact find, we discovered the property had two kitchens, and that the client had some historical bad credit which had since been consolidated.
The Scenario
The client wanted his mother taken off the mortgage and deeds via a transfer of equity, with his partner joining the mortgage jointly with him in her place. This would usually be a straightforward process, but his mother was to remain living in the property afterwards – something that makes almost every lender on the market very nervous, since it falls outside their standard criteria.
The two kitchens complicated things further. On their own, they are not favourable with many lenders but can usually still be placed. Further fact-finding, though, revealed the property also had two front doors, meaning it was effectively two self-contained homes on a single title rather than an unusual layout on one.
The client also had a mix of some recent and some historical adverse credit, and wanted to consolidate his current debts – redeeming the original mortgage, taken out only nine months earlier, along with a second charge and several credit card and loan balances. Property finance alone was costing around £3,500 a month.
The Solution
We persevered and found the one lender across the entire market comfortable with all three complicating factors together: the multi-unit aspect, the two front doors, and the mother remaining in the property despite falling outside most lenders’ standard criteria.
The Outcome
We consolidated the client’s debts and moved the secured borrowing onto one facility at a better rate, saving him almost £1,000 a month.
Frequently Asked Questions
Can someone stay in a property after being removed from the mortgage via transfer of equity?
Most lenders will not allow this, as the person remaining retains certain legal rights to the property.
It is one of the more difficult scenarios to place, and only a small number of lenders will consider it.
Does having two kitchens affect a mortgage application?
It can, though it is often still placeable with the right lender.
The bigger issue arises if a second kitchen allows someone to live fully independently in a self-contained part of the property, which some lenders treat as an unregistered multi-unit dwelling.
How does historical adverse credit affect a mortgage application?
It depends on what the adverse credit was and when it was registered or satisfied.
Older, resolved adverse credit is generally viewed far more favourably than anything recent or outstanding.
Does recent adverse credit always prevent mortgage approval?
No, though it depends on the type and how much of it there is within a given time frame.
Adverse credit against secured lending tends to be viewed most seriously, unsecured credit somewhat less so, and missed communication or utility payments the least seriously of all.
If you have any questions relating to a residential remortgage with adverse credit, contact us today to speak directly with one of our Mortgage Advisors.
UK Mortgage Broker is a whole-of-market broker directly authorised and regulated by the Financial Conduct Authority. Your home may be repossessed if you do not keep up repayments on your mortgage.
Call: +44 1628 969 500
Email: info@uk-mortgagebroker.co.uk
Related Pages
- Bad Credit Mortgages UK – specialist advice for borrowers with adverse credit history
- Residential Mortgages – whole-of-market advice for homeowners across the UK
- Second Charge Mortgages UK – rates, uses and how second charge lending works