Case Study: Debt Consolidation

In this case study, Shawbrook’s Residential Mortgages team has provided a second charge for high net worth joint applicants looking to pay off their unsecured credit card debt.

The two joint applicants approached their broker Niche Financial Solutions, wishing to raise £150,000 to repay their unsecured debt and to raise some additional funds for home improvements. The customers were not able to remortgage as they were tied into their existing mortgage with expensive early repayment charges and were over-committed on their credit cards, paying in excess of £4,500 per month. They could afford the repayments, but were unable to reduce the overall balance and clear their commitments.

Niche approached Shawbrook with the case. The Residential Mortgages team was able to offer the customers the full amount required, without any exceptions to criteria, at a rate of 6.9% on the Super Platinum product at a fixed rate for five years. The monthly repayments stood at £1,283, saving the customers a staggering £3,200 per month in repayments and more importantly clearing their credit card balances.

The customers were also given clear signposting as to how they could best utilise their savings to overpay their second charge mortgage. Overpayments are unlimited and completely free of charge on their Shawbrook mortgage, with no restrictions on the amount paid. This gives customers the flexibility to reduce their balance and interest, helping them to clear their second charge mortgage early if they so wish.

The broker, Sarah Clark from Niche Financial Solutions, had the following to say:

“We approached Shawbrook Bank with this second charge mortgage because we knew, based on the customers’ circumstances, they would be able to offer a very good rate and a fantastic service. The case was worked efficiently and as usual we experienced a very smooth process, from submitting the case through to the binding offer being released.”

Maeve Ward, Managing Director of Shawbrook Residential Mortgages added:

“Over the years traditional banks have tightened their lending criteria, making it tougher for borrowers such as these to remortgage. Not only were the customers tied in, making a re-mortgage costly, it would have also been restrictive in terms of the advance size as traditionally banks restrict capital raising for consolidation to £50,000.

“By taking a second charge mortgage through Shawbrook Bank, the customers were able to achieve their goals, plus they had the added benefit of Shawbrook clearing all the credit. So at the point the mortgage drew down, the customers’ unsecured credit was completely gone, allowing them the fresh start they wanted.”

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