Divorce, Debt, and Redemption: Managing Life Event
|
Alternative Lending Case Spotlight Neighbourhood Holdings |
Divorce, Debt, and Redemption: Managing Life Event
Situation
A mortgage broker approached us with a client who was working through a challenging divorce, which resulted in them having to rely on a large amount of consumer credit to get by. The client finally came to an agreement with their ex-spouse to pay them out and remove them from the title of the property. Unfortunately, due to the client’s reliance on consumer credit and the missed payments on their joint credit accounts, their credit had deteriorated to the point where their financial institution was unwilling to provide them financing during this difficult time. Fortunately for the client, they reached out to a mortgage broker who listened with an empathic ear and closely reviewed their credit history in order to provide lenders with a clear picture of the cause of the deteriorating credit.
Solution
Using the excellent notes provided by the mortgage broker, our underwriters were able to get a clear picture of the timeline leading up to the borrowers credit issues. Additionally, the mortgage broker had come up with a clear plan of action to improve the borrowers credit while achieving the objective of paying off the ex-spouse. The broker estimated it would likely be 18-24 months before they could move them back to the bank so we provided a 2 year closed term at our lowest rate based on their credit. Using the market value of a current appraisal, we provided a 65% LTV loan of $400,000 in exchange for monthly interest-only payments of $2,900.
Summary
Neighbourhood’s Life Event Loan and the Mortgage Broker’s savvy planning enabled the client to payout their consumer debts and payout their ex-spouse.
Notes:
Interest rate was 8.70% per annum, compounded monthly for a 2 year term. Final APR including applicable fees such as lender, broker and legal fees was 9.74%.
The case study above is for educational purposes only, with the intended audience being licensed mortgage brokers.