Credit History & Secured Loans

With a great percentage of UK residence now in some degree of debt, consolidation is becoming more and more popular.

One of the most common methods of loan consolidation is to roll all outstanding debts into one monthly payment in the form of a secured loan. This amount is then secured against the value of the borrower’s home.

Due to the nature of secured loans, an applicant’s credit history has less of a bearing on things than it would if an unsecured personal loan was being applied for. However, it’s important to note that one’s past credit history does still play a role.

Nine times out 10 an applicant with a fairly good credit rating will get a better deal, usually in the form of lower interest rate than a lower credit applicant would. The following is a guide to what can be expected in terms of poor to excellent credit rating.

Poor Credit History

Individuals, who in the past may have defaulted on loans, have outstanding arrears or CCJs will usually not find it too difficult to get approved for a secured loan. They may however, find themselves paying a slightly higher interest rate. In most cases this does not exceed 15% and the average is around 10%. Some lenders may be willing to go as low as 7% though.

Fair Credit History

Individuals within this category will often find that they will have to pay around 7% interest, sometimes though rates of 10% may be applied. When compared to unsecured loan rates, which average about 15%, the secured loan route is generally much more appealing.

Excellent to Good Credit History

Individuals who have never defaulted on past loans and have always repaid on time are likely to find themselves within this group. With an excellent/good credit history come the best secured loan offers. Expect to pay around 6 to 7% interest, with rates rarely lower than 6%.

Source: ArticlesBase

What to Put Down To Get A Good Mortgage?

Typical advice given to middle age people would be to reflect on their increasing cash liquidity, safety, rate of return and tax deductions and also planning for retirement. Perhaps they should sit down with a finnancial planner to discuss their total investments.

Before applying for a you should work on eliminating a good majority of consumer debts to lower your debt-to-income ratio, improve your credit score, and increase your cash flow.

If you saved enough to put down a large down payment, let's say 20 percent, you should first check how much you could afford in monthly payments. The reason behind this is to leverage and keep funds liquid for other purposes.

Remember there is no rate of return in equity. The least amount you put as a down payment the higher the rate of return will be. Usually it is good advise to tell clients never to put a big down payment if they can afford a higher loan amount.

Typical advice given to young couples varies depending on how much money you have to contribute and the type of financing you obtain. Some lenders want you to put down 20 percent or you may qualify for 0 percent financing, requiring you to cover only closing costs and incidentals.

Five percent down is the minimum many lenders will accept. Don't have that much? You could borrow that money from someone, but that means more money to pay back and great overall cost because you pay interest on that also. If you don't put down a minimum down payment the lender considers you a risk.

However, they will give you the loan if you will pay your own insurance. Typical advice given to those without money to put down is, well; you most likely can get a zero percent down loan. Think twice before doing it and here are some of the reasons.

You are more likely to lose your home because you didn't have the financial discipline to save or are not making enough money for your home. The less you put down, the higher your monthly payments will be making the entire matter worse.

If you put nothing down that means you will have to settle with a smaller home and soon out growing it. Also, it will be more difficult to find lenders because of the risk they will be taking on. In the end it is a personal choice and the money that you have saved.

If I had it all, I would put a large amount down to have a smaller monthly payment and qualify to receive a lower interest rate. Therefore, be able to put more into personal savings monthly and reach my goals by keeping my funds liquid and plan for a richer retirement. Well, I can dream!

Source: ArticlesBase

Mortgage Approvals Down Fuelling Housing Gloom

Fears over the state of the UK housing market are on the rise, prompted by the announcement from the British Bankers’ Association that mortgage approvals for September fell 14% compared to August.

Total mortgage approvals for the month of September 2007 for BBA members were tallied at 52,685, significantly down on the 61,051 recorded in August, and weighing in at 27% lower than the same month last year. Indeed, the number of September approvals was at its lowest since 2000. Much importance is placed on the number of UK mortgages advanced in a month as they are a key indicator of the state of the market; a decline suggests that house prices will soon follow the downward trend.

The director of statistics for the BBA, David Dooks said: “Lower amounts of new mortgage lending combined with fewer approved house purchase loans signal a weaker outlook for the mortgage market, especially if loan supply is reduced following the recent financial market difficulties and costs of borrowing remain at current levels.

“There was a small increase in net borrowing during September, alongside a similar increase in overdrafts and loans, but overall demand for unsecured lending continues to remain weak.” He added.

In support of the BBA statistics, a recent survey by the Royal Institute of Chartered Surveyors has highlighted prices falling at their fastest rate in two years. This comes on top of comments from Bank of England Monetary Policy Committee member Kate Barker suggesting that the housing market is overvalued, and could be affected by a shift in people’s perceptions of the market, borne out by the uncertainty in the buy-to-let sector.

Lehman Brothers mortgage expert Peter Newland is anticipating a decline in overall demand for mortgage approval to be reflected in the official figures published by the Bank of England in early November. He expects a drop from the August figure of 109,000 to around 100,000 for the whole market in September. He said: “We expect mortgage demand, as well as other indicators to reflect a further slowing of the housing market in the coming months, to be followed by a sharp slowdown in house price inflation in 2008.

“If we compare mortgages granted in September 2007 to the same time last year, then the amount of mortgages approved has significantly declined, but whether it is just a short-term dip or whether it will bounce back depends on a number of factors, including overcoming uncertainty over house price inflation.”

Source: ArticlesBase

Key Documents for a New Home Mortgage

Trying to have all the particulars lined up is a key to a smooth transition into your new home.

Income

In most cases, your income and employment history are a key aspect in receiving a new home mortgage. In most cases your taxes will do but a letter verifying employment will definitely help the new home mortgage process along. Make sure your spouse or significant others records are available if their names are going to be even remotely associated with the new home mortgage. In many cases these records are not needed but having them available will reduce stress.

Savings

After the recent issues of sub-prime mortgages, lenders are a bit more concerned with how much savings you have in reserve. A home mortgage now requires a look at how many payments you can make if all potential income was lost. In most instances two payments are required. If your particular circumstance has be less-then-perfect, you may be required to demonstrate even more for your new home mortgage.

Down payment

The power of a good sized down payment is often underestimated in mortgage deliberations. The more you can demonstrate you are willing to put on the mortgage, the more clout you have as the lender goes about talking new home mortgage conditions.

Utilities

They may seem like small little bills that don’t carry much weight in new home mortgage consideration but they actually do. They are bills that will be associated with the future running of the home in question. Have at least a six month record of on time payments to show. In the event that they don’t ask for them that’s ok but at least they are there if they are called for.

Inspections, insurance and title

Making sure that the history of the home is documented is up to you. Having an inspection and title search can often be set up though your realtor but the ultimate responsibility is yours. Making sure the title search is complete is perhaps one of those items that should be paid the most attention to in a new home mortgage situation. In-of-itself the title search is really no big deal. If, however, there is an issue that pops up at the very last minute that you didn’t see coming it is the title clearance. For a new home mortgage these documents will need to be in the file.

As you go about pulling these documents together, take the opportunity to do a reality check one last time. You can always decide not to take the step up to the point you sign but as you survey the documents make the mental choice for yourself.

Source: Articles Base