The very best mortgage deals are now only available to those with an excellent credit history and have a deposit of between 30% and 40% of the house value.
If someone’s credit history is good, with only a few minor blemishes, and they have a deposit of between 20% and 30% of the house value, the chances are they will still find a fairly decent mortgage.
For the people who only have a small deposit and need 100% mortgage or are self-employed and need a self-certification mortgage the situation is very different. For those in this category the chances of finding a mortgage are greatly reduced.
Bad Credit Mortgage Loans
For those searching for a bad credit mortgage the situation is almost impossible. Before the credit crunch took hold, bad credit or sub-prime mortgages were widely available. Then, with house prices in the UK steadily rising, buyers and lenders did not see the spectre of negative equity on the horizon.
Bearing in mind that there are still a bewildering array of mortgages available how do people particularly, although not exclusively, in the more difficult to service categories find one that meets their needs?
Martin Lewis, the Money Saving Expert, is one of the UKs most trusted financial commentators and offers some advice on how to find a mortgage in today’s difficult fiscal climate.
Mortgages For People With Bad Credit
To those in the unfortunate position of being forced to look for a bad credit mortgage, while acknowledging that there are still some around, he says,” The few that are available have hideous rates.”
Martin Lewis is quite clear that people should not first approach their bank or building society for a home loan, especially if it’s a bad credit loan that’s needed. As lenders, banks and building societies are in the business of selling their own, not always competitive, financial products. Consequently borrowers are almost certainly missing out on better mortgage deals.
Whole of Market Mortgage Broker
To find the best mortgage deals, particularly for those with a poor credit history, head for the office of a mortgage broker, making sure that the broker is a whole of market mortgage broker and therefore has access to all sources of mortgage lending in the UK.
How Mortgage Brokers Earn Their Fee
Mortgage brokers earn their money in two ways: They may charge the borrower a fee, although if it’s more than 1.5% be very wary. Alternatively some brokers will receive payment in the shape of a procurement fee from the lender.
Advantages of Using a Mortgage Broker
To briefly sum up the advantages of using a mortgage broker:
- A whole of market broker will have access to every mortgage product available on the UK market, including the sub-prime market.
- A broker may have well-established business links with many of the UKs financial institutions, links which the lenders are anxious to maintain. Consequently the broker may be able to apply more leverage on behalf of the potential borrower.