Loan type: Second Charge Mortgages | Loan value: £181,500 | LTV: 59% | Term: 14 years
This case highlights how Aria Finance’s expertise and tailored approach helped a couple navigate complex financial challenges, including credit issues and affordability concerns, to secure the funding they needed to pay an outstanding tax bill and consolidate other debts into a manageable payment.
The Client:
Our clients were a married couple, both directors but with different financial statuses. One was the director of a limited company, while the other was a PAYE director holding a 20% shareholding, which classified him as self-employed for lending purposes. In addition to their residential home, they also owned a buy-to-let property.
The Situation:
The couple sought to raise funds to consolidate outstanding debts and clear a tax bill that had accrued due to financial pressures from running a care home during Covid. They had found themselves in a debt cycle, with some payments significantly increasing due to products reverting to a variable rate. Once they had paid all their monthly outgoings they were left with just £20.43 in their accounts.
There were several challenges that the Aria team would need to overcome:
- They were initially in a mortgage charter (which is an agreement between lenders and the government that offers support and flexibility to homeowners that are facing financial difficulties with their mortgage repayments) when they approached us.
- Their credit history included two late payments on an existing second charge mortgage and a missed payment on their buy-to-let property.
- The husband remained on the mortgage of a previous residential property shared with his ex-wife.
These issues raised potential affordability concerns for many lenders, requiring a careful approach to secure funding.
Our Solution:
We first needed to wait until the clients had exited the mortgage charter, which gave us time to thoroughly review their financial situation. During this period, we focused on:
- Clarifying affordability: We demonstrated that the husband’s ex-wife was solely maintaining the mortgage on their shared property, ensuring it wouldn’t impact his affordability.
- Explaining credit history: We highlighted that the late payments on the second charge mortgage were resolved within the same month, showing the clients were proactive in addressing issues.
- Selecting the right lender: Understanding their unique circumstances, we partnered with a lender willing to take a discretionary approach to their credit history. The lender also accepted an accountant's certificate to reflect the applicants’ projected income, which was crucial in demonstrating their ability to manage future payments.
Benefits & Results:
By taking the time to thoroughly analyse the client’s situation, we clarified affordability concerns, addressed credit issues, and leveraged our relationships with specialist lenders to secure funding. Our ability to navigate complex circumstances and present a strong case ensured the clients achieved their financial goals, despite challenges that might have deterred other brokers.
By consolidating their debts, the clients had a monthly saving of circa £1,095, taking the pressure off and helping them to break their cycle of debt.
