Mortgages: How the cash-poor are stranded in a maze

Here's the good news: it's easier to get a 90% mortgage today than at any time since the credit crunch began. And here's the bad news: interest rates (from 4.49%) on 90% loans are steep, and if it's a 95% loan you want, the rate can spiral to 7%, equal to 14 times the Bank of England base rate.

First Direct, already the cheapest lender for people with big deposits, this week introduced the best-value mortgage for anyone with just 15% to put down. It is offering a lifetime tracker at 3.49% over base rate, currently 0.5%, giving an initial rate of 3.99%, plus a fee of £499.

Analysis by Moneyexpert.com this week found 147 fixed-rate mortgages available for those wishing to borrow at least 90% of a property's value, an 88% increase on this time last year, and said there is a "growing inclination" among lenders to offer higher loan-to-values.

But don't cheer too much. A year ago, the average loan-to-value (LTV) on a fixed-rate mortgage was 75.7%, but today it is 76.8%. In other words, if you want to buy the average-priced UK property at £163,481 (Nationwide index, January 2010), you'll need a deposit of £39,927 to access the best mortgage deals.

Such a sum will remain out of reach for most, which may explain why the first-time buyer market remains moribund. In January, mortgage lending hit an eight-year low of £8.1bn, from £18bn in January 2007. The end of stamp duty relief at the start of the year plus the bad weather evidently deterred buyers. But the English Housing Survey, an in-depth government survey of attitudes and behaviour, suggests other forces are at work.

The survey, published on Tuesday, found owner-occupation is declining year in, year out. It peaked in 2003 at 70.1% and has since fallen to 67.9% of Britain's housing stock. Instead, younger adults priced out of the market are now more likely to rent from buy-to-let landlords. The survey found 3.1 million people in England rented privately during 2008-09, a 50% increase on the 2.1 million in 2001.

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Bad Credit Remortgage Rates in March

Those people reviewing rates on bad credit remortgage loans for this week must be pleased, as rates dropped slightly from last week.  Rates on conventional, conforming mortgages eased as well.  People who are hoping to get a bad credit home equity loan need to consider any number of factors prior to submitting applications with lenders in London such as Barclays or HSBC.  UK banks such as Lloyd’s and Standard Chartered are others that might have solid bad credit remortgage rates.

Other things that people need to consider when searching for bad credit remortgage rates is that one needs to have a significant amount of equity within the real estate that they which to get equity release.  Generally, if a person has made payment on a mortgage for many years, it is likely that there would be some equity in the home that may be drawn out. However, in this strange real estate environment in which we all find ourselves, people residing in such far flung places as London or Los Angeles might find that property values have declined precipitously, and thus, the amount of equity might not be enough to garner that bad credit remortgage.

Check with your bank to get an idea if this type of loan would be possible for you.



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Bad Credit Loan Products For New Year Savings

Bad credit loans are offered to those with damaged credit and low credit scores which makes them the ideal source of funds for people in today's depressed economy. Despite layoffs and severe financial problems related to extended unemployment, many consumers are still able to qualify for a bad credit loan and enjoy the freedom that an infusion of cash provides.

Others may be interested in a bad credit remortgage product to help with the purchase of a new property, or manage monthly mortgage payments through a timely remortgage while mortgage rates are still historically low.

One of the biggest obstacles to buyers is the mortgage process, but bad credit mortgages are often processed faster - and with fewer hurdles, because these loans are traditionally made to customers with less scrutiny of income, credit history, and assets. In fact many recipients of bad credit loans even have a recent repossession or bankruptcy in their credit file.

Bad credit loan products appeal to consumers and homeowners across the economic and demographic spectrum, and are currently gaining popularity as people across the board face the challenge of securing a loan despite poor credit. Not only are these products handy for holiday expenses or home purchases and remortgages, but loans for bad credit can also be customised for use consolidation loans to help pay off credit cards and other types of troublesome debt.


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Bad credit remortgages: Online mode is safe and secure

Bad credit remortgage is the best way to pay of the old or current debts by switching off to the old mortgage to the new one. Online is the best way to apply for these mortgages. Credit check and collateral is not required by the lenders. These remortgages can be used for other personal or professional purposes.
Bad credit is not that much big problem that one can not get the mortgage. People those who are having bad credit score with mortgage loan they switch over to the bad credit remortgage loan. These are beneficial remortgages which allows the person to get the cash for their personal or professional use.

The main goal behind bad credit remortgage is to help the individual to save the money. If the person is already facing the bad credit score then it is the good chance of improving the credit score by paying the money on the right time and breaking up with the financial troubles. There are so many people who have many debts which are pending or may have many current debts which one has to fulfill.

Many of the people take the bad credit remortgage to finance their home. It means that they can add more equity to their homes. It helps in saving a lot of money. If one a bad credit holder then these finances is ideal for them. If one is looking for these mortgages then it will be ideal to search the internet for the best deal so that one can get the best deal. Internet is the fast and best medium by which one can apply easily because internet is easily accessible. By applying through online one has to provide some of the essential details or information which is necessary for the fast approval of the finance.

Bad credit remortgage now are becoming very popular and common among UK people and also among lenders. These mortgages can also be acquired to pay off the old or current debts. Money can also be used for the vacations or buying of new car, children education, etc.

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Remortgages And Secured Loans Are Still Available Even For Those With Bad Credit.

Before the recession bad credit secured loans and remortgages were very readily available.

In the past even people with bad credit profiles could obtain remortgages and secured loans at 75% LTV.

Firstly to explain what is meant by equity. Equity is the difference between the value of a property and the balance outstanding on the mortgage.

This means that if a property is valued at £300,000, and the mortgage secured on it is £100,000, the equity is £200,000.

Remortgages and secured loans at 75% loan to value based on the above example would mean that 25% of the property value must be deducted and what remains would leave the maximum remortgage or secured loan available.

The maximum remortgage available would therefore be £225,000 and the maximum secured loan would be £100,000 as that is the maximum secured loan that can be advanced.

Before the recession bad credit rating homeowners could arrange remortgages and secured loans.

Even those on the verge of repossession could have their property remortgaged at the last moment just as they were about to be rendered homeless.

The recession was precipitated in part by lax underwriting.

Now many people think that secured loans and remortgages are completely unavailable to those with a poor credit rating when this is indeed not the case.

Bad credit home loans are still out there although at much stricter criteria and equity margins than in the past.

Unsecured loans for people with a poor credit history are totally unavailable in these credit crisis hit days and for tenants who are in need of a loan the painful truth of the matter is that they are simply not going to be able to onbtain one at all.

For those who own their property there is help available in the form of bad credit rating loans and remortgages.

For homeowneres with a slighty impaired credit rating the maximum LTV is 60% and this is further restricted to 50% if the borrower has a very low credit history.

The highest loan value is only25,000 mark, but this can nevertheless still be of help to a homeowner struggluing to keep his head above water.

For poor credit rating applicants the interest rate is high at 25% approximately.

However if the homeowner keeps his nose clean, that is his financial nose, after obtaining the bad credit loan he can refinance at a better rate of interest a few years down the line when his credit file is clean.

Remortgages are still availble for bad credit file applicants, but the equity margin will be at 60% and the interest rate will be about 10% which is high but much lower than the high interest credit cards, personal loans, etc. that can be paid off with the remortgage.


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Mortgage shakeup will put squeeze on buyers

BORROWERS should this weekend brace themselves for a radical shakeup in the mortgage market which could prevent thousands of consumers buying a home or moving to a cheaper deal.
A housing boom and delinquent mortgage market are blamed as serious triggers of our current financial crisis, which last week saw unemployment rise to 2.47 million.

Watchdogs at the Financial Services Authority are poised to announce, as early as ADVERTISEMENT

tomorrow, a radical shakeup of the mortgage market, which they hope will prevent such a catastrophe striking again. But loans will be much harder to come by, and potentially more expensive.

However, experts warn that precipitate action could choke off any fragile recovery in the housing market. Council of Mortgage Lenders director general Michael Coogan said: "Today's problem is the lack of available mortgage finance. Regulatory intervention is unlikely to reverse this trend and may accentuate the problem."

Self-certified mortgages, sometimes branded "liar loans", where a borrower's income is taken at their word, will effectively be banned, hitting hard the self-employed and those with fluctuating earnings, as well as those who were "imaginative" about their income in a desperate bid to join the house price party during the boom.

Sub-prime home loans which allowed those with a bad credit history to buy a home, and which have all but disappeared anyway, will remain a thing of the past, making any financial indiscretion a disaster from which you may never escape.

Ridiculously high income multiples, which saw borrowers easily qualify for loans of up to seven times their earnings, well in excess of the traditional three or four times ratio, will also disappear. The watchdog had considered imposing strict caps on income multiples. It opted instead for a prescribed affordability test, still based on an element of income multiples but looking closely at all forms of expenditure as well as earnings.

An industry insider said: "On this basis, it is unlikely borrowers could ever expect an advance of more than five times earnings, as an absolute maximum."

The watchdog will also discuss whether compulsory deposits of a predetermined size should be required to qualify for a mortgage, by placing a cap on loans to values, which would see 100 per cent deals banned. However, this appears to have fallen by the wayside in favour of greater reliance on a strict affordability regime.

And buyers can expect to be locked in a room with a branch manager and read the riot act before the loan is agreed, with banks acquiring new responsibilities for ensuring that borrowers understand the risks they are taking on.

Buy-to-let borrowers, or those looking for finance to purchase a second home, will for the first time be subject to the same rules, making such acquisitions far more difficult and expensive.

If it all looks a touch too draconian, it is worth remembering that the EU is in the middle of drawing up a new mortgage directive which could be even more punitive, given the conservative nature of most European mortgage markets.

Nevertheless, the FSA's proposals will bring major headaches for potentially millions who took out self-cert or sub-prime mortgages in the boom years, and who will now find it impossible to remortgage.

The regulator is expected to demand high levels of evidence from all borrowers of their income before an advance is agreed. This will mean salary checks at firms for those who have a job, and at least three years of audited accounts for the self-employed.

Many currently on self-cert arrangements will not be able to provide sufficient evidence to support their current loans, particularly given the impact the recession has had on salaries and the income of small businesses. If their current mortgage becomes hideously uncompetitive and expensive, they will not be able to move to a cheaper lender.



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Credit where it's due: firm revamped payment terms to cope with squeeze

WHEN Seamus Redmond made sweeping changes to his credit terms, the driver was sheer necessity. With €200,000 in bad debts courtesy of the construction collapse, the engineer knew his seven-man flooring company, Renobuild, couldn't withstand many more defaulting customers even though new business is flourishing.

"I've never seen anything to stop as sudden, abrupt, and severe as cash flow," he recalls with a near-shudder.

"We were being paid in 30 days, then it was turning into 90, then people stopped answering the phone. I was putting my own savings into the company to keep the place going."

Inspired by the practices of one of his own suppliers, Mr Redmond changed his standard credit terms from 30 days to a 50pc payment upfront plus a credit card with room to take the rest, or a letter of guarantee from a bank.

Credit insurance, something Mr Redmond admits he hadn't known about before the downturn, was also explored; but he found that door had already closed, leaving Renobuild to plough on alone.

Cutting off future bad debts at the source was only half the battle -- Mr Redmond still faced the challenge of his own creditors who'd gone unpaid when Renobuild's cash-flow dried up.

Believing himself to be "financially a bit of an idiot", he employed local Gorey firm Horizon Financial to run the rule over his company's books.


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