Commercial remortgage with arrears solved

As a wise man once said, even the best laid plans can go wrong. In finance and property this seems to be particularly true. As a result, many borrowers believe high street lenders, commonly known as being less flexible than specialist lenders, can make things difficult. There’s this preconception that mainstream lenders are unable – or unwilling – to be as accommodating. However, such lenders are actually prepared to listen to brokers which take the time to present the case well – even in this recent case we dealt with in which the client had heavy mortgage arrears..

Our client in Edinburgh, let’s call him Mr A, owned a number of fully occupied HMO’s jointly with his soon to be ex-wife. As part of the divorce proceedings Mr A was to vacate the marital home and sign it over to his wife. Mrs A was to stay and maintain all running costs of the marital home and Mr A would provide her a lump sum each month to do so until the divorce was finalised.

Understanding Market Rates & Repayment Terms

An additional part of the divorce agreement was for Mr A to retain the HMO’s solely in his name on the proviso that he refinances the BTL’s and removes his ex-wife’s name from the deeds by a mutually agreed date. If he can’t achieve this, the BTL’s must be sold off and remaining monies to be split equally.

This all sounds straightforward but unbeknown to our client, his wife had not maintained the residential mortgage payments in an attempt to block the potential re-finance of the HMO’s by adversely affecting Mr A’s credit profile. This would delay the refinance and result in Mrs A benefitting from half of the equity in the HMO’s. Once the client became aware of this he instantly cleared the nine months’ worth of arrears and then maintained the payments direct himself. However by then his credit profile was severely damaged

Key Criteria & Application Guidance

Our task was to secure a refinance proposition, before the deadline, preferably with a mainstream lender, to ensure the new structure was affordable. However this meant satisfying the bank’s credit risk team that the residential mortgage arrears were as a result of a deliberate attempt to force the sale of these assets.

After obtaining all the evidence and legal documents we approached a well known high street bank and submitted the case to them structured and presented in the exact format that painted the picture in the clarity it needed for an out of plan decision to be made. After providing several pieces of additional information we were able to satisfy the credit team and they produced a commercial mortgage offer for 70% LTV at a rate of 2.89% + BBR. This enabled our client to finalise the divorce and more importantly retain his investment properties and income that they generate.

Behind most cases there is a story. We like to hear the story, not just the facts, as this can often make the difference between a yes and a no.

www.promisemoney.co.uk

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