Last week we received a telephone call from a long standing customer.
9 years earlier John had sought our advice to purchase a new home and we had organised a great lifetime tracker mortgage which in the current period of low interest rates had performed well for him; very well. He said that the product that we had recommended and the advice received had saved him thousands of pounds over the years.
John said that although he and his family really liked their home and in particular its location, which was important in terms of motorway links, they needed more space and as he was now working two days a week from home, it really needed a home office.
Rather than bother us for advice on a £50,000further advance, John said that he had contacted his lender directly and had been told that the additional funds would “not be a problem”. John said that he had filled in some paperwork with them and had been told it would take a few weeks to complete. A week later John said that he had received a letter from his lender telling him that his application had been declined due to “impaired credit” and that he should obtain a copy of his credit file, which he duly did.
John said that he was “horrified” and extremely angry when he looked at his credit report. One of the accounts was a credit card in his name, in default for £ 567.27, which was not his.
At this point he told us, reality had dawned; identity theft. “Everybody else’s problem, until it’s yours”, he said.
John told us that his first thought was that the defaulted account would not be a problem as it was not his. Although sympathetic, when John called his lender to explain, they had said that whilst the adverse account information was on his report there was nothing that they could do for him.
John said that his next move was to telephone the credit reference agency and tell them to remove the information. They told him that they could not do that as the data did not belong to them, it belonged to the card company. So guess who John said that he called next, the fraud department of the card company. He was informed that in effect it could take up to a year to clear up the case and in the interim the default would remain on his credit file.
John said that he had been looking at some of these sites that compare mortgages and asked what we thought of a £300,000 re-mortgage to a lender that would accept the default?
Our advice was:
- Leave the first mortgage in place, as it was on a very low 0.16% Lifetime Tracker, which is unlikely ever to be available again
- Take out an Early Repayment Charge free second mortgage for the £50K, over an affordable initial term, which would be a good solution as these lenders generally disregard a default of this size
- When the default issue is resolved, return to his main mortgage lender for a further advance in order to repay the second mortgage
John said that this advice seemed the best it was going to get and duly went ahead. Five months later he called us to say that the credit card fraud department had resolved his case as they had received “intelligence”, proving that the card account did not belong to him.
He has now obtained a further advance from his lender and paid off the second charge mortgage.