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Case Study – Remortgage in Employment Probation Period

Introduction – Mortgage In Probationary Period

Clients purchased their house 5 years ago. Shortly after moving in they realised that considerable refurbishment was required. Credit cards and unsecured loans were used to fund the works and the total borrowing amounted to £110,000.

The repayments on their unsecured borrowing and mortgage. Although affordable were putting them under considerable financial pressure. They decided to consolidate this debt into a second charge secured loan. Initially this gave relief from their finances pressures but was still an expensive solution.

In February 2020 the clients approached Orchard Mortgage Solutions for advice and guidance. Unfortunately the Covid19 pandemic hit shortly afterwards. Resulting in one of the applicants being made redundant. As a result it was not possible to re-mortgage. The clients took mortgage payment holidays with their lenders for a period of three months. This was considered the best financial option as the second applicant was self-employed and there was uncertainty around income levels.

The applicant was offered a full-time position in September 2020,with a six month probationary period. At this point they asked ourselves to look at re-mortgage options .

Solution

Although in employment, the number of lenders that offer mortgages to employees within a probationary period is limited. There was also the added issue of a self-employed applicant and proving income levels during the pandemic. Lending to applicants that had taken payment holidays and worked in certain business sectors. Was also another factor impacting on the lenders willing to offer mortgage facilities.

Having spoken with a number of lenders the decision was taken to progress a re-mortgage application with a High Street Lender. The lender underwriting criteria allowed for applicants to apply for a re-mortgage whilst in a probationary period. They also accepted an eight month break in employment. As the applicants new job was at a similar level of seniority and in the same business sector. With the help of the applicants Accountant is was possible to demonstrate that Covid19, hadn’t impacted on the second applicants self-employed income.

It was agreed with the lender that they would allow the clients to re-mortgage and in doing so consolidate the second charge loan.

Outcome

The clients re-mortgaged on to a competitive 2 year fixed rate mortgage and maintained their current mortgage term of 25 year. As a result of consolidating the second charge loan and switching to a new mortgage lender. The clients are saving £466 per month.

If you have recently started a new job and are in a probationary period and need to re-mortgage. Call for a confidential chat on 01257 543013.

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