Recently we received a thank you card from a customer who we had just remortgaged, and inside it thanked us for freeing them from the misery of an impaired credit mortgage. This statement made me think that there are possibly millions of people who took mortgages out just before the banking crisis that were either impaired or self certification mortgages. I believe that after the banking crisis many people were resigned to being stuck with the higher rate product that they had taken out.
Unfortunately this was the case for many years as lenders adopted an ultra low risk approach. However as time has gone by just by paying their mortgage non standard borrowers are becoming lower risk even with minimal house price inflation. This is because the percentage to value is reducing and lenders even in these difficult markets tend to be a little more relaxed when lending if their risk of loss is lowered. Also lenders like people with steady incomes so the self certification mortgages of almost a decade ago taken out when you had recently become self employed may no longer be appropriate. This maybe because the business has become established with many years of accounts, or you have ceased self employment becoming employed with again steady income.
If you can now tick the boxes with regard to steady income and having preferably decent equity in your property, then we need to turn to your credit that may have been the reason for having higher interest deal in the first place. As a starting point I would recommend that you get your credit report that can be obtained online from companies such as Experian. This document should enable you to see how you shape up with regard to obtaining a mainstream mortgage in 2015. I believe that so long as your income and expenditure are appropriate for the amount you wish to borrow, that with a reasonably clear credit search a standard mortgage could be within your reach.
However it could be that not all boxes are ticked with possibly some of the poor credit of years ago still weighing you down. But I wouldn’t despair as some lenders have become more flexible, and dependent on the amounts a standard rate mortgage could still be attainable.
Also when I think back many people not only took out non standard mortgages in the early to mid 2000’s but also interest only mortgages. These people may feel that even if they could remortgage at low rates they couldn’t afford the change over to a repayment pattern, with perhaps having say only ten years before reaching what was normal retirement age of 65. Again the good news is that if you are going to continue to work or can afford the repayments from pensions in retirement that some lenders will let you extend your term past normal retirement age. So the message is don’t despair if you have a sub prime mortgage but consult an IFA who specialises in mortgages to see if it is possible to remortgage and get a better deal.
Kieron Bassett DipPFS, Cert SMP
26th October 2015
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