The big change in the mortgage market this year is that you may find it much easier to buy a house with a smaller deposit. One area where it hasn’t become much easier is if you have been struggling to obtain a mortgage because of your credit rating. Due to the number of repossessions in recent years and house prices not rising every year like they were, lenders have become much more wary of lending money in the way that they used to.
Having a history of missed payments, CCJs or bankruptcy has always had an affect on obtaining credit, but now it is a lot more significant. Lenders may limit the maximum loan to value they will offer you, charge you a higher rate of interest, charge bigger fees, or you may find that you are not able to obtain a mortgage at all.
Even slight blips in your credit file can mean that you end up paying the same amount each month towards your mortgage for a property that costs £100,000 as you would have done for a property that cost £150,000.
One way of tackling problems before they happen, is to ensure you take steps to protect yourself. Making sure you have an emergency fund is important to ensure you have a buffer for when things go wrong, like if your washer, dryer and boiler all break down at the same time. Income protection cover and accident, sickness & redundancy cover can help replace your income if it should suddenly stop due to you being off work due to an accident, illness or if you’re made redundant. Life cover can help protect your family from financial stress should the worst happen.
Making sure you keep your credit file clean is as much for your own benefit as it is for the benefit of any partner you have, or will have in the future. Having a blemish against your credit file means that your partner will feel the affect too, and they may not be best pleased.
If you are having trouble keeping up with repayments, the worst thing that you can do is stick your head in the sand. If you ask for help the minute you are feeling the strain, some lenders may be willing to assist you to make sure you don’t get too far behind. Lenders appreciate it when you let them know that your struggling, and they should try and help you if they can. If you have family or friends that might be willing to help you, don’t be afraid to ask them too, instead of waiting before it’s too late.
It’s not always easy to organise your finances, and there will almost certainly be points in everybody’s lives where they feel financial strain. If you have had some problems in the past that has stopped you being able to obtain a mortgage from your bank, that doesn’t necessarily mean that all the lenders on the market will decline your application. It is worth contacting an independent financial advisor to talk about that options you have.
Kieron Bassett Financial Services has two Independent Financial Advisers who specialise in mortgages and investment advice. Contact us on (01524) 832057, via e-mail, info@kieronbassett.com, or visit www.kieronbassett.com.
Jason Hinde CertPFS
17th February 2014
“