Possible Finance
Options
If you are in arrears with your mortgage or foresee
that you may go into arrears you may be able to borrow money against
your home. It is first of all important to remember that taking
on further secured debt decreases the amount of equity in your home.
Depending o your financial situation the following
options may be appropriate:
A Homeowner loan (also known as a secured
loan)
If you have a High Street mortgage at a competitive rate it may
be best to take out a secured loan. If you are in arrears any finance
taken will be at a premium and if possible it is likely to be best
to take out a secured loan so only this element of borrowing is
charged at a premium. You may also have a tie in period with your
current lender and a new mortgage would mean that you will suffer
a penalty. We advise many people to take out a secured loan where
possible and put themselves in a position where they will hopefully
then make 12 consecutive payments on the mortgage and loan. Most
lenders only take the last 12 months mortgage payments into account
so as long as there is no other form of adverse credit a new competitive
mortgage with a High Street lender can be arranged consolidating
the mortgage and secured loan.
New Mortgage
It may be best to take out a new mortgage if still possible, there
are some lenders that offer another chance with mortgage products
offering unlimited arrears options. Before the credit crunch of
late 2007 there were lenders offering mortgages of up to 85% loan
to value on a self certified basis. This has now been capped at
75% and if you are with a sub prime lender you will likely need
to have paid your last three months mortgage payments in full and
on time.
One of the most common causes of mortgage arrears
is due to other debts making everything unaffordable. In many cases
the client has taken on an expensive secured loan and maybe further
unsecured borrowing. A new mortgage may help to consolidate everything
giving one low payment that is affordable so that no payments are
missed on the new mortgage. It is however important to highlight
that you may be securing debts that were previously unsecured and
also the debt is being paid over a longer term so you may actually
pay more in the long run.
Third Charge Secured Loan
There are a couple of lenders that will provide a secured loan even
if you already have a secured loan. These can be handy if for example
you have not made any recent mortgage payments and can help to clear
some or all of the arrears and a buffer so that you can make three
consecutive mortgage payments so that a new mortgage can be arranged
consolidating the mortgage, secured loan and further secured loan,
or they could help to clear the arrears so that you can sell your
home under your own steam.
Non Status Bridging Loan
This can be used to raise anything from £26,000 upwards on
a first or second charge basis. You may be selling your home and
wish to raise the necessary capital to give you the cash flow to
sell your home under your own steam. It can also be used to redeem
your current mortgage in full stop repossession and can also be
used if you have actually been evicted. There are a handful of lenders
that will provide the full redemption balance on your current mortgage
so that you can regain possession of your home and then allow you
to remortgage or sell your home at the full market value as opposed
to being a repossessed property.
A good mortgage broker will present you with a
list of all options when you may be going into arrears with your
mortgage or if you are in arrears. Like this web site aims to demonstrate,
the options of negotiating with your current lender may be a better
option than any form of additional or new finance.
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