Getting a remortgage with adverse credit is a daunting task and it is increasingly becoming a widespread problem in UK. An adverse credit remortgage is a type of mortgage, which is particularly used by people who have adverse remarks in their credit history.
Adverse credit ratings are rising as people are finding it difficult to repay the loans they took in order to remedy their financial exigencies. The credit ratings are remarks given by your previous creditors based on your repayment history. If you are punctual and prompt in repaying the installments they give you a positive remark and a negative rating incurs, if you miss their installments and are erratic in the repayment schedule.
Lenders are wary of this negative or adverse credit rating. They find it risky to lend any amount to such persons and reject their applications in most of the cases.
While, applying for an Adverse credit remortgage, the borrower has to face two kinds of situations. In the first case, although he has an adverse credit rating against him, he can offer something like a house or home equity as a collateral to the remortgage. In second case the borrower with the adverse credit history doesn't have anything to offer as collateral or the value of collateral is not adequate to guarantee the loan.
The lenders, if they find that they can get something as collateral for the remortgage offer, are prompt in lending as compared to a situation where they have to lend solely on the basis of creditworthiness of the borrower. The lenders are comfortable by the fact that if the borrower defaults in payments, they can repossess the collateral. Depending on the collateral and creditworthiness, lenders fix interest rates, lending amount and the repayment schedules.
Remortgaging involves changing the mortgage without changing the existing house or property. Adverse credit remortgage can be used for getting a better deal on mortgage from a different lender. It can also be used to get an improved deal on mortgage from the existing lender. Adverse credit remortgage may also be used to provide funds or to get a loan on the increased equity in home or property. They are very useful in consolidating existing debts from various sources into one single manageable loan. Emergency expenditures like the purchase of a car, a holiday, some reconstruction or medical bills can be funded by such remortgages.
Getting an adverse credit remortgage to finance these purchases is considered a wise option because remortgage offers lower interest rates and easy repayment options as compared to other methods of borrowing.
People with adverse credit should be very cautious while taking a remortgage. Mortgage lenders in UK are squeezing such people with higher interest rates and unreasonable terms and conditions.
Remortgaging involves many fees, which increase the cost of the process. There are early redemption penalties, re-appraisal of property, solicitor fees, office and conveyance charges, which have to be taken into consideration while taking an adverse credit remortgage. The fact that a borrower has an adverse credit rating makes the situation even worse for him. As the lending market in UK is very competitive the borrower is advised to shop around for lenders, which offer zero product fees, cashback, free basic property valuation and minimum fee for legal and other expenses. A good lender, who provides adverse credit remortgage will negotiate the best possible deal on prepayment penalties for its client. Finding such a lender is not easy but ultimately it will be worth the effort.
For most of us, if we have something to offer as collateral, getting an adverse credit remortgage will be quite easy. The new lender will ask for all the documents and complete the formalities. If everything goes smoothly, it won't take long to get an adverse credit remortgage.
Thursday, July 2, 2009
Number of Mortgage Products available rises - Mortgage Advice
, The situation as I see it!,
Money seems to be in short supply; interest rates offered by banks for saving money remains diabolical; unemployment is expected to increase by quarter of a million as students leave university and college and members of Parliament from all sides of the political spectrum have exploited their expenses for years. Meanwhile the Royal Bank of Scotland which we all co-own has warned that they are preparing for two "very tough" years after they announced yet more losses for the first three months of this year. Confidence is a fine grey line and the experts are still scrambling around trying to find solutions and answers. Do we really believe that the recession is nearing the end?
The Bank of England decided to keep interest rates at 0.5% which is at an all time low after their monthly monetary meeting yesterday. It is thought that they are more concerned with the results of quantitative easing which they implemented earlier this year to inject money into the economy. They are now studying the economy for signs of improvements as they continue to print loads of money in an effort to get the economy moving again.
Estate agents around the country are reporting that more people were showing an interest in buying properties. One institute announces house prices starting to climb while another says they are still falling, who should we believe? The Halifax reported that housing affordability for first-time-buyers had improved substantially and was the best for six years in other words the house price to earning ratio had improved. Unfortunately, the average first-time-buyer still needs to find around £20,000 as a deposit and to cover legal expenses. The amount of money spent on a mortgage each month had dropped from 48% in 2007 to 31% in 2009 mainly due to the cut in interest rates for borrowers on tracker rate and standard rate mortgages. This has not been the case for homeowners on a fixed rate mortgages.
, Number of Mortgage schemes available rises,
Mortgage Brain, is one of two live mortgage systems used by mortgage brokers' to search the market for the best mortgage and remortgage product for clients. They have reported an 8% increase in last month's mortgage product available. The number of products available in March 2009 was 3,091 and on the 5th May 2009 it rose to 3,322 products available. Whilst this looks like a glimmer of hope it should be remembered that at the height of mortgage lending there was some 23,000 plus products available to homeowners to choose from.
During the past twelve months the number of mortgage products available has remained bleak with a 73% drop from this time last year. It seems that over the past two months the number of new mortgage schemes available has risen by 22%, which is good news. Although this information can be seen as encouraging I don't believe that there is yet any indication that the market will bounce back today or tomorrow. There are bigger issues that need resolving first.
, The stark Facts,
This information is great news for borrowers and homeowners looking to borrow money for a mortgage up to 85% of the value of their home. Mortgage Lenders are still not showing any signs of offering mortgages to new clients with any adverse credit. If you have missed a mortgage, credit card or loan payments and you have less than 15% equity in your home then there is limited number of mortgage schemes available to you. Your only option is to remain with your current lender and take what they offer. Not an ideal situation I know! But hopefully you still have a roof over your head.
Money seems to be in short supply; interest rates offered by banks for saving money remains diabolical; unemployment is expected to increase by quarter of a million as students leave university and college and members of Parliament from all sides of the political spectrum have exploited their expenses for years. Meanwhile the Royal Bank of Scotland which we all co-own has warned that they are preparing for two "very tough" years after they announced yet more losses for the first three months of this year. Confidence is a fine grey line and the experts are still scrambling around trying to find solutions and answers. Do we really believe that the recession is nearing the end?
The Bank of England decided to keep interest rates at 0.5% which is at an all time low after their monthly monetary meeting yesterday. It is thought that they are more concerned with the results of quantitative easing which they implemented earlier this year to inject money into the economy. They are now studying the economy for signs of improvements as they continue to print loads of money in an effort to get the economy moving again.
Estate agents around the country are reporting that more people were showing an interest in buying properties. One institute announces house prices starting to climb while another says they are still falling, who should we believe? The Halifax reported that housing affordability for first-time-buyers had improved substantially and was the best for six years in other words the house price to earning ratio had improved. Unfortunately, the average first-time-buyer still needs to find around £20,000 as a deposit and to cover legal expenses. The amount of money spent on a mortgage each month had dropped from 48% in 2007 to 31% in 2009 mainly due to the cut in interest rates for borrowers on tracker rate and standard rate mortgages. This has not been the case for homeowners on a fixed rate mortgages.
, Number of Mortgage schemes available rises,
Mortgage Brain, is one of two live mortgage systems used by mortgage brokers' to search the market for the best mortgage and remortgage product for clients. They have reported an 8% increase in last month's mortgage product available. The number of products available in March 2009 was 3,091 and on the 5th May 2009 it rose to 3,322 products available. Whilst this looks like a glimmer of hope it should be remembered that at the height of mortgage lending there was some 23,000 plus products available to homeowners to choose from.
During the past twelve months the number of mortgage products available has remained bleak with a 73% drop from this time last year. It seems that over the past two months the number of new mortgage schemes available has risen by 22%, which is good news. Although this information can be seen as encouraging I don't believe that there is yet any indication that the market will bounce back today or tomorrow. There are bigger issues that need resolving first.
, The stark Facts,
This information is great news for borrowers and homeowners looking to borrow money for a mortgage up to 85% of the value of their home. Mortgage Lenders are still not showing any signs of offering mortgages to new clients with any adverse credit. If you have missed a mortgage, credit card or loan payments and you have less than 15% equity in your home then there is limited number of mortgage schemes available to you. Your only option is to remain with your current lender and take what they offer. Not an ideal situation I know! But hopefully you still have a roof over your head.
The Sub-Prime Mortgage Market is broken - Mortgage Advice
Mortgage resuscitation required urgently!
The UK housing market will not recover until the mortgage market is fixed and expert advice at the Bank of England says, print more money in the hope of saving our economy from a long and drawn out recession is the answer. The Council of Mortgage Lenders says the number of UK households with mortgages is 11.7 million and has a value of over £1.2 trillion of these approximately 51% are fixed rate mortgages; 40% are on tracker, discounted or variable rate mortgages and less than 8% are on their lenders standard variable interest rate scheme. The mortgage market needs urgent resuscitation and repair to restore the banks lending confidence. We may have green shoots appearing across our economy but they don't seem to have any roots yet.
A recent poll of 539 professional mortgage brokers by Exact Mortgage Expert suggested that house prices were likely to continue falling for the next six to twelve months and the housing market had not bottomed out yet. Many housing commentators feel that the market still has a further 6% to 7% to fall before we reach this illusive bottom is found. Lloyds Banking Group say that the decline in property prices this year is around17.7% with the average home now valued at £154,716. In the last year the average property value has plummeted by £33,264.
Sub-Prime borrower in Limbo
According to the latest Mintel, one third of the UK mortgage borrowers are facing financial difficulties and 1.5 million have fallen behind with their monthly mortgage payments. Those borrowers that have fallen behind with their repayments are considered by future lenders as sub-prime borrowers and they are offered less than favourable interest rates when they come to remortgage. There are now only two lenders remaining that will consider sub-prime or non-standard mortgages compared with the non-standard or sub-prime industry prior to August 2007 when the 'Credit Crunch' started. Whilst the lenders have disappeared the sub-prime borrowers have remained in limbo not knowing where to go or what to do and the number new recruits has swelled.
Since the rescue of the banking system by the Government last year and the sharp drop in the base rate by the Bank of England it seems that all the lenders have lost their appetite to lend money to homeowners and potential new borrowers. Lenders are nervous about incurring further losses and have drastically tightened their lending criteria. This means that borrowers are unable to refinance their homes easily and first-time borrowers now require a deposit of around 25% just to get on the property ladder. As a result of this large deposit being required many have turned to the bank of mum and dad for help in raising a deposit. The lenders have now become very choosy who they lend money to.
The UK housing market will not recover until the mortgage market is fixed and expert advice at the Bank of England says, print more money in the hope of saving our economy from a long and drawn out recession is the answer. The Council of Mortgage Lenders says the number of UK households with mortgages is 11.7 million and has a value of over £1.2 trillion of these approximately 51% are fixed rate mortgages; 40% are on tracker, discounted or variable rate mortgages and less than 8% are on their lenders standard variable interest rate scheme. The mortgage market needs urgent resuscitation and repair to restore the banks lending confidence. We may have green shoots appearing across our economy but they don't seem to have any roots yet.
A recent poll of 539 professional mortgage brokers by Exact Mortgage Expert suggested that house prices were likely to continue falling for the next six to twelve months and the housing market had not bottomed out yet. Many housing commentators feel that the market still has a further 6% to 7% to fall before we reach this illusive bottom is found. Lloyds Banking Group say that the decline in property prices this year is around17.7% with the average home now valued at £154,716. In the last year the average property value has plummeted by £33,264.
Sub-Prime borrower in Limbo
According to the latest Mintel, one third of the UK mortgage borrowers are facing financial difficulties and 1.5 million have fallen behind with their monthly mortgage payments. Those borrowers that have fallen behind with their repayments are considered by future lenders as sub-prime borrowers and they are offered less than favourable interest rates when they come to remortgage. There are now only two lenders remaining that will consider sub-prime or non-standard mortgages compared with the non-standard or sub-prime industry prior to August 2007 when the 'Credit Crunch' started. Whilst the lenders have disappeared the sub-prime borrowers have remained in limbo not knowing where to go or what to do and the number new recruits has swelled.
Since the rescue of the banking system by the Government last year and the sharp drop in the base rate by the Bank of England it seems that all the lenders have lost their appetite to lend money to homeowners and potential new borrowers. Lenders are nervous about incurring further losses and have drastically tightened their lending criteria. This means that borrowers are unable to refinance their homes easily and first-time borrowers now require a deposit of around 25% just to get on the property ladder. As a result of this large deposit being required many have turned to the bank of mum and dad for help in raising a deposit. The lenders have now become very choosy who they lend money to.
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