We recently completed an application with Pepper Money that illustrates perfectly the ability to deliver a financial solution for clients, even when they are doubtful that there are any options available to them.
Our client found themselves in a challenging financial situation. As a self-employed individual, they needed to borrow £530,000 to pay off existing loans and debts. The renovation of their buy-to-let (BTL) portfolio had significantly increased their current loan repayments, nearly tripling their financial obligations.
However, their main residential property had appreciated in value, and they were benefiting from a low long-term fixed rate mortgage, which included high early repayment charges (ERCs).
Initially, the client considered remortgaging or borrowing more through their current lender. However, due to the substantial ERCs associated with their current deal, combined with the fact that they were on a lower fixed rate than currently available in the market, remortgaging was not a viable option.
Keeping their current, more favourable mortgage deal intact was crucial, and so a secured loan was the most effective strategy to consolidate debts and reduce monthly payments, without disturbing the terms of their current mortgage.
Given the client’s unique situation – a self-employed individual with a substantial loan requirement, a large property with land, multiple investment properties, and diverse income streams, Pepper Money emerged as the most suitable lender.
There were several reasons for this – the rate was very competitive, and the client valued the ability to make overpayments, which Pepper Money facilitated. In addition, we were confident that with the right packaging and positioning, Pepper would more than meet the expectations of the client.
With an excellent credit rating and strong affordability, the client was quickly accepted and our experience was seamless, even given the complexities involved with this case.
Not just adverse credit
Traditionally, secured loans have been perceived as solutions for clients with adverse credit histories. However, we’re witnessing a shift.
More clients with perfect credit scores, strong incomes, and good affordability profiles are finding secured loans to be a strategic financial tool. This trend is particularly evident among those who want to consolidate debts or borrow more, at the same time as keeping their primary mortgage intact due to benefitting from an existing low rate, with high ERCs payable if they were to remortgage.
It is important to explore all available options, and this example clearly demonstrates why more mortgage brokers are willing to integrate secured loans into their advice journeys.
By leveraging the diverse and flexible solutions offered by lenders, we can better serve clients with complex needs and ensure they achieve their financial goals.
Phil Bailey is partnerships director at Loan.co.uk
