Lauren* is a customer who had a high mortgage APR and monthly repayments on her primary mortgage, due to an adverse credit history since she first purchased her property.

The increase in mortgage payments after her fixed rate product ended meant that she had insufficient funds available to fulfil the monthly interest payment obligations on her second charge loan, resulting in arrears accruing.

Lauren was anxious about making contact and reaching out for help which resulted in interest arrears accruing to an unmanageable level.

However, once she had communicated with our shared-equity team and explained the situation, we were able to reassure her that there were avenues to explore which could resolve the situation and we introduced her to an Independent Financial Advisor (IFA).

After taking some details, the IFA was able to source Lauren a suitable re-mortgage product for her primary mortgage to a new lender who specialises in customers with adverse credit, which also had a more favourable rate, lowering the interest payments more than enough to free up funds to enable her to fulfil the repayments due on the second charge loan.

The new mortgage product did initially come with very high product fees, however as Fi-Nest always have our customers’ best interests in mind, especially in cases of adverse credit, we then liaised directly with the new lender and reached an agreement to remove the product fees altogether.

The mortgage was put in place and Lauren is now able to pay both her primary mortgage and second charge loan repayments comfortably each month.

Alongside this resolve we also put in place a manageable repayment plan to make up the interest arrears which is currently being repaid over a 12-month period.

*The name has been changed, but this case study is based on a real-life customer experience. Any options we may suggest will be based on your individual circumstances and your lender’s forbearance policy.

Mohammed* is a customer who had lost his job and felt it would be quite some time before he would be able to secure permanent work again.

He decided to turn to Universal Credit to get by, but because he owned a property the only assistance available to him towards his mortgage repayment obligations was a  ‘Support for Mortgage Interest’ loan from the Department of Work and Pensions.  Mohammed was extremely worried about the arrears that would build up and how he would catch up with payments once he was back in full time work and contacted Fi-Nest to ask for information and support.

Whilst Fi-Nest, as the second charge administrator, was able to grant Mohammed a ”payment holiday” for the monthly interest payments due, to assist him during this challenging time and provide him with details of free debt advice via the Citizens Advice Bureau and Step Change, Mohammed felt that the only solution for him was to let go of the property.

Mohammed informed us that he had decided he wanted to enter into voluntarily repossession of his property by handing the keys back to the primary mortgage lender and walk away, thinking this would be his best option.  However, in the course of his contact with us we were able to take the time to explain to Mohammed the negative impacts this decision would have, not least the damage the adverse effects on his credit file would have on his economic situation for years to come.

When Fi-Nest looked at his property value and his remaining first mortgage balance, it became apparent that Mohammed could sell the property himself, repay both mortgages with the proceeds and walk away with enough equity to be able to rent privately, which in turn would mean he was eligible to receive the support from Universal Credit towards his rent, until such time that he was back on his feet again.

Had Mohammed gone ahead with the voluntary repossession, the additional legal fees involved in the process, which are borne by the borrower, would have resulted in him being left with a shortfall on his second charge loan.  Instead, he is now settled in rented accommodation and can move forward without owing a debt to his mortgage lenders.

Whilst in this scenario a payment holiday alone wasn’t the end solution for the customer, Fi-Nest was able to assist Mohammed, providing him with the information he needed to make a decision which would leave him free of mortgage debt and without the harmful repercussions of a repossession, thus avoiding a worse outcome.

*The name has been changed, but this case study is based on a real-life customer experience. Any options we may suggest will be based on your individual circumstances and your lender’s forbearance policy. 

Paul* is a customer who purchased his property with his partner, but they have since separated.

When they purchased the property, they did so with a primary and a second mortgage, for which they were both jointly and severally liable.

Unfortunately, the break-up was unamicable and resulted in Paul’s ex-partner leaving the property with no forwarding address so that Paul had no means of tracing his ex regarding their joint debt obligations on the property.

During this time, while Paul remained in the property, the second mortgage matured and the repayment was due.

Having insufficient savings himself to repay the loan sum due, Paul looked into remortgaging but was unable to re-finance the property or to sell it without the consent of his ex-partner. Paul then sought legal advice which he understood would be costly and ongoing.

In consideration of Paul’s situation, Fi-Nest liaised with the second charge lender to explain his case, whereupon the lender agreed to extend the term of the mortgage by twelve-months, interest free, to allow Paul time to go through the legal process involved in the division of assets.

This intervention alleviated Paul’s immediate concern for his home and allowed him time to pursue the matter with his Solicitor.

*The name has been changed, but this case study is based on a real-life customer experience. Any options we may suggest will be based on your individual circumstances and your lender’s forbearance policy.