I have been refused a mortgage due to bad credit, what does that mean?
If a borrower has a history of poor credit usage then this is described as Adverse Credit. Poor Credit history can include County Court Judgment (CCJ), Bankruptcy, Mortgage arrears or any late payments on credit arrangements. For example, some of the terms used are:
Arrears
This describes the amount the borrower is behind in his mortgage repayments schedule. The amount is usually measured in either pounds or months.
Bankrupt
A Corporation, Firm or individual who, via a court proceeding, is relieved from paying all debts once assets have been surrendered to an appointed third party designated by the court.
What is a County Court Judgment (CCJ)
A County Court Judgment is an adverse ruling by a County Court against a person who has not satisfied their debt payments with their creditors. Once the ruling has taken place it will be recorded against the person’s credit history and will appear every time a credit search is done for the next seven years. If a person has a County Court Judgment against them it will usually have to be satisfied before they can get a loan. Mortgages for people with adverse credit will be charges at a higher interest rate.
Default
Failure of an individual to make payments on a mortgage at the correct time or to not comply with the mortgage companies requirements.
I’m a first time buyer – What types of Mortgage are available to me?
Generally Mortgage schemes and their terms can vary from lender to lender. So it is important to get independent advice.
Our Advisers will explain the different types of home loans available these will include capped rates, fixed rates, tracker rates, discounted rates, current account mortgage, cash backs and flexible mortgages, to help you make an informed choice on which is the best deal that suits your own individual circumstances. We will also give you full illustrations showing the monthly cost and all the fees applicable to the selected scheme.
What is a Mortgage Indemnity?
Mortgage Indemnity Guarantees [MIG] are based on the purchase price and are usually charged on loans of 90% and above. A MIG is a one off payment made to the lender which in most cases can be added to the loan. This charge is a one-off payment to provide an insurance policy that protects the lender should you default on your loan and the property is repossessed. As you are the Guarantor of the policy the insurers have a right to recover any payment made in the event of a claim and look to you as the Guarantor to repay this.
Why does a lender insist on a Mortgage valuation?
A mortgage valuation is a requirement of the lender to ensure that firstly the property is valued at the least the price you are paying for it. From this figure they can determine whether the amount you wish to borrow is in-line with their terms and conditions and the property is considered to be good security. The lender will have the ‘First Charge’ or ‘Primary Charge’ on the property and would therefore have an interest until you have repaid the loan.
The Surveyor will report to lender if there are any major defects and the potential re-sale value of the property should they need to re-sell the property in the event of you defaulting on the loan and the property is repossessed. The valuation fee is paid for by the purchaser and the report is the property of the lender, therefore, you will not usually be able to see a copy – even though you have paid for it.
The initial valuation may highlight structural or areas of concern to the lender which may result in the lender insisting that a more detailed surveyors report is instructed and any specialist report may be necessary. This can often happen if the original surveyor notes in his report if he has noticed, for example severe damp or dry rot. Any costs associated with these reports would need to be paid by you.
How do you find the best deal for me?
With over 6,000 mortgage products available choosing the best deal requires fine tuning. After establishing your requirements our advisers will recommend the most suitable product available this matches your needs.
Why do I have to prove my Identity?
Brokers and lenders are required by law to identify purchasers. This is to prevent Money Laundering and Identity theft. Guidance notes have been issued by our Regulators to help brokers implement the correct procedures to assist in stopping people using the financial sector for unlawful purposes.
Can you give me an indication of the amount of loan I can have before I have found a property to buy?
Yes, by speaking to one of our advisers they will let you know the maximum amount of mortgage you can have taking into account all the factors that might affect your level of borrowing. They will also take into consideration your budget and personal requirements, an agreement in principle can also be arranged with a suitable lender prior to you finding a property which can speed up the buying process and put you in a stronger position with the vendor.
Can I buy a new home without selling my existing property?
A new loan can be arranged for the purchase of your new main residence whilst you keep your current property to let out; this is known as a ‘let to buy’ mortgage. You would need to satisfy your new lender that the existing property will be let with sufficient rental income to support the existing loan. Please contact us for more details.
My interest rate is coming to an end, how can you arrange a new deal and give me some surplus cash to pay off my credit cards and buy a new car?
Yes, researching the whole market place would be part of the assessment we would carry out. Once we have established your current circumstances, before we can advise you whether changing from your existing lender is viable we would carefully examine your affordability to ensure that the new loan is within your budget and the new rate selected matches your needs and requirements.
What is the difference between re-mortgage and a second charge?
A re-mortgage is when you change from your existing lender whom holds the ‘First Charge’ to an alternative source. With second charge you remain with your current lender and providing they give permission, another lender may place a legal charge or second mortgage on the difference between the first charge or current loan and the value of the property. Generally the re-mortgage option is a cheaper method of raising capital rather than the second charge.
My last broker charged me a 1% arrangement fee and I was not happy with service and the property fell through – can I ask for it back?
Yes, it is important to establish how advisers are paid before you proceed. Our Regulators advise that If you do not take up a loan within six months of application, then the maximum fee that an adviser can charge is £5.00, therefore, you can ask for a refund.