Archive for December, 2007
Mortgage Brokers – Are They All the Same?
You may be looking for a mortgage and have decided to use a mortgage broker, rather than just going to the bank. This is a sound idea.
But the next question is – how do you choose a mortgage broker? Do you just pick one at random from the Yellow Pages?
Before deciding which mortgage broker to use, you need to know what different types of mortgage broker there are.
As far as access to lenders is concerned, there are basically three types of mortgage broker:
1. Some mortgage brokers are tied to a lender or a small group of specific lenders. A “mortgage adviser” in your bank or building society is likely to be of this type. In some cases they are actually employed by the lenders whose products they sell, so they are bound to promote these products. The only advantage of using one of this group is that they might be able to get you a good deal on one of these mortgages.
2. Other mortgage brokers have access to a “panel” of lenders. These panels vary in size – some are very small, some are fairly representative of the market as a whole. Some mortgage brokers who work from the larger panels will dexcribe themselves as “whole of market” because their panel is representative of the market, but this is misleading. However, the range of products they offer could be quite a good selection, including specialist providers and smaller building societies. Also they too might be able to get you a good deal. Ask the size of the panel they work from and avoid those working from very small panels – say, less than 12.
3. A truly independent mortgage broker will not be tied to any lenders. These brokers will be able to recommend providers from virtually the whole of the market. (There is actually no such thing as a completely “whole-of-market” mortgage broker as there are some lenders who don’t offer their products through brokerages.) Of these brokers, some will charge you a fee while some work on a commission basis. Many people prefer to use a mortgage broker who charges fees, feeling that this way they can be sure of truly impartial advice. However, brokers are bound by the terms of their professional code to offer the best advice for their clients.
If you want to be sure of finding a mortgage that is exactly right for your individual circumstances, you would be best to look for an independent mortgage broker. Check that the broker works on a “whole of market” basis and whether they charge fees or not. This will help you find the mortgage broker who is right for your needs.
By: SeanH-9584
Three Steps to Finding A Bad Credit Mortgage
If you find you have been turned down for a mortgage it may have come as a shock. Or maybe it wasn’t a shock, as you were aware you had had some credit problems in the past. But either way, you will probably feel humiliated and embarrassed.
If you are in this position you may be tempted to give up altogether. But if you have really set your heart on owning your own home, that would be a pity. Because there is almost certainly a bad credit mortgage out there for you. It’s just a matter of finding it.
So how do you go about it?
1. Find an independent mortgage broker and check that he/she deals in bad credit mortgages. It’s very important that you go to someone like this rather than just going to your bank. The broker can help you avoid getting further rejections, which will make your credit rating WORSE.
2. Be honest. The broker can’t help you if you don’t disclose ALL the relevant information. It may be embarrassing but it’s nothing the broker hasn’t heard before – in fact he/she has probably heard a lot worse stories than yours. Answer all questions fully and honestly. If the broker knows your exact situation, he/she should be able to scour the market to find a bad credit mortgage lender who will accept you. If you conceal information because it doesn’t show you in a good light, you risk further rejection which will certainly not help you.
3. Listen to advice and be realistic. You may find that the type of property you have set your heart on is beyond your means. If the broker points this out to you, don’t storm out in a rage and go somewhere else. If you are having financial problems, the last thing you need is to over-extend yourself even more. A bad credit mortgage is already more expensive than a standard mortgage, and you don’t know if interest rates are going to go up even further. So let the broker help you work out what you can REALLY afford and stick with that.
However bad your situation is, there could be a bad credit mortgage out there for you. But you really do need the broker’s help to find it.
By: SeanH-9584
Why Do I Need A Bad Credit Mortgage?
Bad credit mortgages are much easier to obtain than they used to be. But just how easy? This rather depends on why you actually have the bad credit in the first place.
So what are the reasons why someone might need a bad credit mortgage?
• In some cases, you could have problems with your credit rating through no fault of your own. For instance if you have just moved house, a previous occupant at that address could have had poor credit. It has also been known for people who shop around for the best deal to be penalised. Every time a credit search is done, it shows up on your credit record, and if you then don’t take up the offer, it is assumed you have been turned down! If you are rejected and you are sure you have never defaulted, ask to see your credit record and get it corrected.
• Again, it has been known for quite well-off people who are self-employed to show up badly in a credit search, simply because they don’t have a 9-5 job! This shouldn’t cause too many problems in getting a mortgage, but you need to provide proof of your income.
• Lenders get twitchy if you’ve fallen into arrears on a previous mortgage. It makes you seem like a less good risk. You may still be able to get a standard mortgage, not necessarily a “bad credit mortgage”, but you may be excluded from the best deals.
• One thing that is looked at quite seriously is a county court judgment (CCJ) against you. You get this if you default on a repayment or debt to the extent that the creditor has to take you to court and an order is made against you. If you then don’t pay the money within one month, it will be recorded as a CCJ against you and stay on your record for at least six years. This will seriously affect your credit rating and you will almost certainly have to settle for a “bad credit mortgage”.
• Bankruptcy – some people opt for this when they realise that they can’t pay their debts. It can be tempting as it seems to be a way of making a new start with a clean slate. However you could have your house and many of your belongings repossessed in order to make partial payment to your creditors. As you would expect, it has a very serious effect on your credit rating and you may not even be allowed a credit card for several years. You would certainly have to settle for a “bad credit mortgage” if you could get one at all.
The best way to start is by talking to an independent mortgage broker. Be honest about your past problems and the broker will be able to advise you whether you need a bad credit mortgage and how to proceed.
By: SeanH-9584
Use a Bad Credit Mortgage to Improve Your Credit
If you are suffering from credit problems in your past, so that you are finding it hard to get a mortgage, or can only get a bad credit mortgage, you may well feel very ashamed. Perhaps you are wondering what steps you can take to improve your situation.
There are two major ways you can do this.
1. One type of bad credit mortgage you can get is a “credit repair mortgage”. If you enter into this type of arrangement, you will have to pay quite a high deposit and a high rate of interest. However, once you have taken this out, a good independent broker will keep in touch with you and encourage you to keep up your repayments on your mortgage. If you do this successfully for about three years (depending on the seriousness of the problems you have had), your credit rating should have improved sufficiently to enable you to switch to a standard mortgage with much more competitive terms. The broker is crucial to this. You need one who will stay in touch and judge when you are in a position to switch, and actually help you with the process
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2. The other thing you need to do is take control of your finances. It’s essential that you face up to, and sort out, whatever problems led to this situation in the first place. Contact all your lenders and card companies and come to an arrangement with them. Most of them will accept a lower monthly payment if they believe they will eventually get their money. And get rid of as many cards as you can – the fewer cards you have, the better it will be for your credit rating. Plus, the less temptation there will be to spend on them. It’s no good making the effort to keep up the payments on your credit repair/bad credit mortgage, if at the same time you are over-spending in other directions or running up further credit card balances. Just don’t make ANY further credit card purchases!
You will find that these measures mean you have to reduce your standard of living for a while. But it will be worth it if at the end of the period you are back with a reasonable credit rating. Once you have switched from your bad credit mortgage and your mortgage payments are reduced, you can give yourself a (modest) treat! But make sure you stick to your new regime and don’t ever get back into that situation again.
By: SeanH-9584
Bad Credit Mortgage: What to Beware Of
People often ask if you can get a mortgage if you have bad credit. The answer is, yes.
A decade ago it was much harder. If you admitted to having a credit record that was less than perfect – or if checks revealed any blemishes – prospective lenders would hold up their hands in horror. Then they would use this as an excuse for slapping on sky-high interest rates, high deposits and all sorts of restrictions on your mortgage – if they would let you have one at all.
Now there are a lot more mortgages available for people with past credit problems. And the greater competition means that the interest rates on a bad credit mortgage, though higher than on a standard mortgage, are not as high as before.
So if you come into this category, does this mean everything is fine now?
Well, it rather depends on the reasons why you have bad marks on your credit file. If you have just had a few hiccups in recent years for understandable reasons – marital breakdown, for instance, or frequent house moves – it shouldn’t be too difficult to get a bad credit mortgage with a mainstream lender.
If your problems are more serious – for example if you have one or two CCJs (county court judgments) or a persistent record of defaulting on payments – it will be more difficult to get a bad credit mortgage, but still possible. But in this case there are things you need to be careful of.
• The bad credit mortgage market is becoming an attractive one as debt figures rise. The lenders will try to convince you they are doing you a favour and will try to charge you more than necessary. But remember they are in it for their own benefit, not yours. Do shop around.
• Be careful about the advice you are given. If you seek advice from one of the specialist lenders of bad credit mortgages, they may come across as very caring, but their main object is to sell you a mortgage. They won’t be too concerned as to whether you can afford it or not – or even whether you actually NEED it. Make sure you get qualified and unbiased advice.
• If you have a lot of debts it will be tempting to roll them all into the bad credit mortgage. But remember the debts will still be there. Do you really want them ALL secured against your house – especially if you haven’t been all that good at managing your payments?
• Beware of companies advertising “bad credit mortgages” on TV or in direct mailings. Some of them charge up to a 3% fee to arrange one of these mortgages. On a six-figure mortgage this comes to a LOT of money.
• Take steps to check out which lenders are likely to accept you BEFORE applying. Every time you apply and get rejected, this will show up on your credit rating and make it even worse!
It’s really important to take advice from an independent mortgage broker – and make sure it’s one who has access to bad credit mortgages. This way you can be sure of finding a solution that’s in your interests, not that of the lenders.
By: SeanH-9584
Mortgage Broker: Guiding You Through the Mortgage Jungle
Nowadays, applying for a mortgage is a fairly everyday experience.
A decade or so ago it was different. Many people regarded it with fear and trembling. You made an appointment with your Building Society manager, dressed in your smart clothes, and sat across from him (it was usually a “him”, and pretty intimidating he could be) on the other side of a huge desk. Then you meekly answered all his questions, hoping he would consider you reasonably respectable and would deign to grant you a mortgage.
These days there are hundreds of lenders all competing for your business. Most of them offer not one product but several, so altogether there are literally thousands of mortgage products to choose from. Now you are the one who is doing the deciding. How are you supposed to know which one is right for you?
Really, there is only one person who can act as your guide through the mortgage jungle – an independent mortgage broker.
Of course you can always go and ask advice from your bank manager. But remember that banks these days want to sell you their own products. The bank isn’t going to look at the whole market, and you can’t be sure that they are advising you solely in your own interest. They are actually bound by the terms of their employment to push certain products at you.
Alternatively you can go online and surf through all the different lenders. If you do this, you will probably pick the one that offers the lowest interest rates. But you may be in for a nasty shock when the mortgage is actually arranged and you find the rate you are actually getting is a lot higher. The lenders advertise a “typical interest rate” to pull you in, but there is no guarantee that that is the rate you are going to get.
It’s all very bewildering, but a mortgage broker can help you. It’s not only a question of finding the product that looks most attractive. Everybody’s individual circumstances are different. Age, financial situation, credit history, availability of deposit, type of property you are looking for, whether you are a first time buyer, what level of monthly repayments you can manage – all these factors mean that, virtually, no two applicants are the same. A mortgage broker won’t push a product at you for the sake of it. A broker will look your specific situation and take it from there.
Somewhere out there, there is a mortgage that is just right for you. It will be much easier for you to find it with a mortgage broker’s help.
By: SeanH-9584