Published 26 March 2019 · Last reviewed 26 March 2019 · Older article — see current rates
If you have taken out a payday loan in the past getting a mortgage will be harder depending on your past conduct and timescales.
Payday loans are one way of making the month feel shorter but what can be a “one off” can mean the next month is even harder to navigate. Before you know it there is no light at the end of the tunnel. Borrowing against property using the Second mortgage to clear payday loans product might be a better way to reduce your monthly outgoings. The rates are likely to be far less that Payday loans and you could perhaps take out more to steady the ship.
The downside is the repayment will be spread over a longer period which will add to the overall borrowing costs, and failure to keep up repayments may result in the loss of your home so you need to think carefully.
A track record of Payday loans when asking for a mortgage however is not as straight forward as it sounds even if you have always paid the Payday loan on time. Mortgage Lenders generally see it as a sign of financial stress rather than a modern day lifestyle choice and most will not allow instances of Payday borrowing in the last 12 months.
Step forward an exception: the “Second mortgage to clear payday loans product”, a secured loan available to homeowners with an existing mortgage.
Key criteria for
- Second charge mortgage (otherwise known as a secured loan).
- No limit on the number of Payday in the last 12 months.
- Borrow up to £150,000.
- Combined first and second mortgages must not exceed 75% of the property value.
- Capital and Interest repayment method only.
- Debt consolidation.
- Up to the age of 70 years for manual job workers (unless you have a good private pension).
- Up to the age of 80 years for non-manual workers.
- Loans for 3 years to 25 years.
- Most property types.
- Income will be assessed but can include state benefits.
- Zero hour contract earnings considered.
- Your current mortgage provider must be willing to grant permission for a second charge.
Case Study 1: Second mortgage to clear payday loans product
Iris has taken out 10 Payday loans in the last 12 months with most of them being at Christmas. She has run an online shop from home for a year and has just filed her first year’s profit of £25,000. Her bungalow is worth £150,000 and she has a £40,000 mortgage on it. As well as pay off her latest Payday Loans she wants to clear a car loan for £20,000 and credit cards £17,000. Taking out Second mortgage to clear payday loans product put her in a better position so provided a positive solution for her.
Case Study 2: Second mortgage to clear payday loans product
Bob has a number of Payday loans to his name and has in fact 3 of them missed the due date when he was between work. He is now full time on a permanent contract so was surprised when he applied for a remortgage and was turned down. He was looking a buy a static caravan for his grandchildren to visit and thought his family holiday dreams would have to wait a year. By using the Second mortgage to clear payday loans product he was able
Every case will need to be carefully discussed with a qualified broker to make sure what is the right approach for you so please do give us a call.
Niche Advice offers appropriate advice for customers looking to take out a mortgage with a Payday loan history.
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