Financial Restructure: Why restructuring your finances may be a good idea, and how Shire Direct can help!
A Financial Restructure can be a good idea if you are finding your outgoings are greater than your income.
"Starting to feel there's a light at the end of the tunnel, thank you"
Mr G., Oakwood, Derby
So here we take a look at Financial Restructure and how it works, the advantages and disadvantages of restructuring your finances, along with details of how we can help you!
Table of Contents:
Do you have more money going out than you have coming in?
Our financial budgets often fall foul of our plans, often due to circumstances beyond our control, for example because of a loss of income caused as a result of some or all of the following:
- Short-time working
- Loss of second income
- Childbirth
- An accident or illness leading to incapacity to work
- Marital or partnership breakdown
- An unusual or unexpected event, e.g. high cost of car repairs
- Increases in interest rates and therefore higher mortgage payments
- Bereavement
- Overspending or financial mismanagement
The problem arises where your outgoings are greater than your income. So a one time manageable budget has gotten out of hand as a result of one or more of the above factors. If the problem isn't tackled properly, the situation can be calamitous, especially if mortgage arrears start to mount up!
It's an all too familiar story. Interest rate increases, mortgage payments start to rise. Add to this the increase in costs of council tax, fuel, energy, and even the cost of drowning our sorrows, and suddenly our books don't balance!
What is a Financial restructure and how can restructuring my finances help?
A financial restructure can be an extremely useful way of bringing an otherwise deteriorating financial situation back on track! This can often be achieved simply by putting all your debts into one basket!
So how do we do that?
Well, we'll need to carefully assess your circumstances, and research the possibility of rescheduling your existing mortgage and other debt and replace them with one new loan by means of a remortgage.
By switching your mortgage, you'll have the opportunity to take advantage of one of the many special deals, and preferential rates that are available in today's market place. For example fixed rates, discount rates, or cashback mortgage schemes, or you may prefer to consider a flexible mortgage or an offset mortgage.
By consolidating your existing debt into one manageable monthly payment, you can usually bring your finances back in line. The following fictitious illustration shows how this can be achieved:
| Existing Mortgage: | £100,000 at Lender's Standard Variable Rate (SVR) of 7% |
|---|---|
| Second Mortgage: | £28,000 at 12% over 15-years |
| Credit Cards: | £25,000 repayments at 3% of the card balance |
| Bank Loan: | £5,000 at 8% over 60 months |
| HP: | £8,000 at 15% over 5-years |
| Total Debt: | £166,000 |
| Total Monthly outlay: | £2,034 |
| Existing Mortgage: | £170,000 at 6% Fixed for 5-years, thereafter lender's SVR |
|---|---|
| Second Mortgage: | REPAID |
| Credit Cards: | REPAID |
| Bank Loan: | REPAID |
| HP: | REPAID |
| New Mortgage Loan : | £170,000 including costs of remortgage |
| Total Monthly outlay: | £1,096 |
So can I restructure my finances?
Well, that's going to depend on quite a lot of factors.
But a call to one of our friendly qualified mortgage advisors will soon put you in the picture. However, you must of course be a homeowner or mortgage-payer, and you should have sufficient equity to be able to accommodate your new borrowings. We will obviously ensure your new monthly repayments are affordable, and in our example, the new monthly repayments are almost 50% less than the old ones.
That looks good, but are there any downsides to financial restructure?
There are downsides, and under the Financial Services Authority's "Treating Customers Fairly initiative" , we are only allowed to proceed with a transaction if you will benefit as a result. The benefit is of course that your monthly repayments can be substantially reduced, and you can breath again, financially speaking!
However, the disadvantages of debt consolidation by remortgaging could include:
- Any unsecured debts will become secured upon remortgaging.
- Your home will be at risk of repossession if you do not keep up your repayments.
- Although the overall remortgage interest rate may be significantly less than those charged on unsecured borrowing, because the debt will be spread over a longer term, you will pay more back in the long run.
- There are attendant costs of remortgaging, including valuation fees, solicitors costs and mortgage broker fees.
Could Shire Direct help me restructure my finances, even if I have poor credit?
Yes! No problem!
Firstly, we'll carefully assess your circumstances, needs, requirements and aspirations, and come up with the options open to you. We have an extensive range of mortgage products drawn from our lender panels, which have been designed to accommodate a wide selection of situations.
So, poor credit problems such as County Court Judgements (CCJs), credit defaults, or mortgage arrears, needn't be an issue. Similarly, self-employment without audited accounts can be accommodated. Even more serious financial problems like a discharged bankruptcy or Individual Voluntary Arrangement (IVA) action will always be sympathetically considered.
You'll find our service to be friendly yet professional, helpful and unstuffy. Please don't hesitate to contact us if you would like to discuss your requirements, naturally without obligation! Our mortgage advisors are available up to 10.00pm everyday on Freephone 08000 282 281, and we'll be delighted to provide you with an in-principal decision - whatever your circumstances, alternatively why not enquire online at any time!
Well, we hope we've managed to satisfactorily explain Financial Restructuring for you, and how we may be able to help you with a financial restructure. Remember, there is a wealth of mortgage and remortgage related information throughout our website, so why not take a little time out to explore some of the potential options that could be available to you and if you feel we can be of assistance, we're only ever a freephone call or couple of mouse clicks away and would love to hear from you!
The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.
There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.
THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Adding existing debt to your mortgage will increase the repayment term and overall cost.
Are you worried and becoming stressed because you are having problems getting a mortgage or remortgage? Worry and stress no more! Here at Shire Direct we provide tailor made mortgage solutions to suit you, and can usually help with all kinds of circumstances including...
Remember, we're here to help, and would love to hear from you!
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Registered No: 302389. Commercial funding and Secured Loans are not regulated by the FSA.
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