| Charcol starts to cater for borrowers with poor credit rating
Mortgage broker Charcol is offering free mortgage advice to homebuyers with a poor credit history who might otherwise find themselves at a disadvantage when applying for a home loan. Sub-prime borrowers are vulnerable to intermediaries who advertise as specialist adverse credit brokers, some of whom charge very high fees. Charcol.co.uk estimates that the annual lending in this sector is around £30 billion, or approximately 8% of the market, and this is a figure that is growing as more borrowers have difficulty meeting higher interest charges. Repossessions are already predicted to rise to as high as 55,000 in two years time and unsurprisingly those with a poor credit history account for 70% of the rise. 'The amount of personal debt in the UK continues to grow, particularly in a rising interest rate environment and for financially vulnerable borrowers to be charged outrageous fees for consolidating their debt is simply not right,' said Peter Barrett, managing director at Charcol.
Charcol offers free mortgage advice to those with poor credit
Charcol.co.uk has decided to offer borrowers with a poor credit history the chance to get tailored mortgage advice for free. In a market that is awash with brokers who charge exorbitant fees, Charcol.co.uk is determined to break what it sees as the vicious circle of debt. Borrowers spend so much on organising a non-standard loan that they are never offered the chance to break the cycle.
Charcol.co.uk estimates that the annual lending in this sector is around £30 billion, or approximately 8% of the market, and this is a figure that is growing with the increasing interest rate environment the economy is currently in. Repossessions are already predicted to rise to as high as 55,000 in two years time and unsurprisingly those with a poor credit history account for 70% of the rise.
Bad credit history 'doesn't have to mean bad mortgage deal'
Having a bad credit rating does not necessarily mean customers can only obtain a poor mortgage deal, a leading lender has claimed.According to L&C, 71 per cent of people who have come to the company with a bad credit rating have been able to secure a mainstream mortgage deal with a competitive interest rate.Many people believe that a recent history of bad debt or County Court Judgements (CCJs) would prevent them getting competitive mortgage deals. However, L&C revealed that the situation is less clear than that, and that some lenders are more lenient that others."All too often, people assume that because they've had some credit problems in the past, they will have to pay a much higher interest rate and in some cases, high broker fees," explained James Cotton, a mortgage specialist at L&C."In fact, our research shows that by getting whole of market advice from L&C, borrowers can seek out the best deal for their circumstances and can often secure a better rate than they thought possible."A recent study from the Mortgage Trust found that record numbers of people were opting for fixed-rate mortgages.As interest rates have risen, the percentage of people choosing these sorts of mortgage has increased from 48 per cent to over 60 per cent.
Bad credit does not have to mean a higher mortgage rate
Having a poor credit rating does not always result in a higher mortgage rate according to research from London and Country Mortgages (L&C), fee-free mortgage broker.
So far this year, 71% of borrowers who have come to L&C with some credit problems have been able to get a mainstream mortgage deal.
Most high street mortgage lenders will not accept borrowers will a recent history of defaults or County Court Judgements (CCJs). However, it is not a simple case of black and white and some lenders are more lenient that others. L&C has found that many borrowers with only minor blemishes on their record are surprised to find themselves accepted by a mainstream lender.
James Cotton, Mortgage Specialist at L&C comments, “All too often, people assume that because they've had some credit problems in the past, they will have to pay a much higher interest rate and in some cases, high broker fees.
Bad Credit Home Loans Consumers With Bad Credit
There are hundreds if not thousands of websites on the internet enumerating the ways to apply and receive home loan when you are plagued with bad credit issues. These sites help consumers with bad credit scores to increase the viability of their existing credit scores and set up loans regardless of their credit history. There are mortgage companies that actually provide tips, sympathy and a free "easy" Bad Credit Mortgage Approval Form. With this form they are able to decide whether the applicant is eligible for some of their home loans customized for consumers with bad credit. Once that is ascertained, the process of securing the loan begins. In addition to this service, companies provide educational supplements for the consumer with bad credit. They explain what a credit report is and why it is so important.
‘Piggybacking‘ roils credit industry
Only a low credit score stood between Alipio Estruch and a mortgage to buy a $449,000 Spanish-style house in Weston, Fla., a few miles west of Fort Lauderdale. The result was a happy ending for Estruch, but the growing practice is sending shivers through the mortgage industry. Federal regulators are also reviewing the practice. And after being contacted by The Associated Press for this story, Fair Isaac Corp., the developer of the widely used FICO score, said it will change its credit scoring system beginning later this year in a way it contends will end this little-known but potentially high-impact mortgage loan loophole. The pitch to those who are essentially renting their credit history for pay is seductive: You dont need to worry about users of this service receiving duplicate copies of your credit cards, account numbers or any of your personal information.
Mortgage lending more tailored to borrowers' needs, CML claims
Lenders are now taking steps to tailor Mortgages to better incorporate the risk factors associated with individual customers' circumstances, the Council of Mortgage Lenders (CML) has revealed.The CML said mortgage lenders are increasingly looking at affordability measures and taking a "much more individualistic approach" to the needs of their customers.It went on to explain that the growth of the sub-prime mortgage market in particular had proved difficult to monitor due to the varying definitions of what a sub-prime mortgage actually is.Generally sub-prime Mortgages target borrowers who do not qualify for prime Mortgages because of adverse credit history and as such are offered at a higher rate than standard mortgages due to this increased risk. "Part of the difficulty with producing hard and fast data on this is the lack of a clear definition of what constitutes a sub-prime mortgage," Bernard Clarke, spokesperson for CML."People have a variety of different circumstances, many of which mean that they don't qualify for a prime mortgage, but there may be other products that can help them," he added.
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