In the new world of mortgages, it has become much harder to obtain credit. The people who have felt this more than any, are those that have below average credit ratings. Partly due to the number of missed payments and repossessions recently, 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 than ever. 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 £120,000.
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 you and your partner will feel the affect, even if they have maintained their finances perfectly.
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, you are much more likely to come out of the other side unscathed. 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 are an Independent Financial Advisers and we are open six days a week. Contact the office on (01524) 832057 or via e-mail info@kieronbassett.com to arrange an appointment.
Jason Hinde CertPFS