Subprime Lending

Right now it’s first-time buyers who are ringing mortgage advisers phones off the hook after the Government offered them a lucrative tax break last month.

The Chancellor recently increased the stamp duty threshold to £250,000 for first-time buyers, giving them up to a £2,500 tax break. That has meant a lot more people are calling mortgage advisers to see whether they can finally get onto the UK housing ladder.

The latest figures from Unbiased.co.uk says that 40% of all enquiries to mortgage advisers right now through its website are from first-time buyers. People who have never had a home loan understand better than anyone that mortgages are complicated and fraught with danger so they are turning to professionals who they know will offer them the best mortgage possible and the best service possible.

Karen Barrett, chief executive of unbiased.co.uk, says: “Since the start of the year we have found that first-time buyers are seriously looking into getting their foot on the property ladder.

“However, buying your first property is daunting and requires careful planning and research – not only into finding the right house, but also ensuring you will be able to cover the monthly mortgage repayments, the fees and the extra costs involved in buying a house -  it is essential that both first-time buyers and those looking to remortgage seek professional advice to ensure they are making the best decisions for their individual circumstances.

“Only a whole of market mortgage adviser can give advice on products from across the market, which suit the individual’s needs and financial position.”

SOURCE: Unbiased.co.uk, 19/04/10

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

More than a fifth of Brits currently in debt are lying to their partner about the amount of cash they owe – if you are hiding your problems the only way to ever solve them is to deal with your debt head on.

According to the Post Office, the average person in the UK has £9731.51 worth of debt. However, on average, people will only admit to half of what they owe  – £4,603.17 – when talking to a partner or family member. It says nearly a third of people also admit to hiding the extent of their debt from other family members.

The report also revealed the serious emotional and physical consequences of covering up that debt, ranging from sleepless nights and anxiety, to turning to alcohol and problems at work – simply, if you hide your adverse debt you only make the problem worse and will make your journey out of debt more prolonged. Talking to a professional will not solve problems overnight, but it is a positive start.

The Post Office says more than three quarters of people who have an amount of hidden debt have never confessed to the true extent of their adverse debt. And of the 22% who did confess the true extent of their dishonesty, the majority were caught out rather than choosing to come clean.

Doug Strachan, director of financial services at the Post Office, says: “The recession has put a massive strain on many families and people may be, for the first time, experiencing levels of debt that they cannot control.

“The most important thing to remember is that if you do need to borrow money make sure you are responsible about it and set out a clear re-payment plan. Managing the debt effectively can mean there is no need to experience the terrible emotional and physical symptoms hiding debt can result in.”

SOURCE: Post Office, 22/04/10

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

If you have limited equity in your home you can get hold of a mortgage but it is going to cost you more for the privilege – unless a good mortgage broker can help you put together an affordable deal.

It’s a fact that borrowers with small deposits are paying substantially more for mortgages according to Defaqto. It says the credit crunch and recession has made lenders much more risk-adverse, which means they are demanding more money for riskier loans, like high LTV deals.

David Black, banking specialist at Defaqto says: “Three years ago there was little difference in the interest rates charged whether you had a 10% deposit or a 25% deposit. Since the credit crunch the situation has changed significantly and those seeking a higher LTV mortgage have to pay significantly more.”

Defaqto says an average borrower with a 90% LTV interest-only loan pays £9,180 for a two year fixed rate whereas a borrower with a 75% LTV loan for the same amount will only pay £6,330 – a difference of £2,850 with an interest rate difference of 1.90%.

It might be that through a mortgage broker, who has close relationship with mortgage lenders of all shapes and sizes, can find you a high LTV mortgage that doesn’t break the bank. It’s true that less equity means higher rates, but a good broker may be able to prove that wrong.

SOURCE: Defaqto, 18/04/10

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

People are becoming so desperate to find ways of handling their adverse debts that they are willing to commit fraud – if your debts are driving you to think of crime, you have to get help before you get yourself into too much trouble.

New research from LV= suggests that the number of people sustaining broken ankles from slipping on a pavement, whiplash from a car accident and post-traumatic stress has sky rocketed since the onset of the recession. While it may be that plenty of those claiming for injuries are real, it beggars belief that the increase and the recession are just coincidence.

LV= says the indebted now more likely to turn to insurance fraud in order to sort out their financial woes and most solicitors questioned by the mutual say that companies specialising in personal injury claims advertising a ‘no win, no fee’ offer are tempting people to make fake, or exaggerated, claims.

If you are struggling, don’t risk more fines or even a jail sentence. Talk to a professional about how to handle your debt in a sensible and legal fashion. It might mean trying to get hold of legitimate credit, it might mean just rearranging your finances or it might mean something more drastic. But whatever you do, and whatever the solution may be, get real legal financial help because insurance fraud never pays.

SOURCE: LV=, 14/04/10

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

Finally! After years of adverse debt problems, many more people have finally seen the light and will now do all they can to reduce their debts rather than amass even more.

In fact, repaying debts this year is one of the main financial priorities for people in the UK, according to John Gilbert Financial Research. It has found that more than two thirds of adults in the UK plan not to borrow money and instead focus on saving money, getting to grips with debt or investing their money wisely.

Interestingly, over a quarter of those asked by the group wanted to focus on repaying their debts. They realise that amassing more and more short-term unsecured debt will not solve their problems, only exacerbate them.

A fitness instructor will tell you that fat is easy to to put on but very hard to take off – debt is exactly the same. You may have spent years filling in forms for free and easy debt and it is only now that you have decided to get on the finance treadmill, so to speak, and begin trying to shift some of that debt.

But help is at hand – good financial advisers are the financial fitness instructors. They know the best ways to reduce debt  and make you a fitter, leaner borrower. Like working out in the gym, it isn’t easy and it might be painful at times, but at the end of it you will feel a million times better.

SOURCE: JGFR, 09/04/10

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

You might have spent the last year or two struggling with debt on a daily basis – but are you still in denial as to how serious your sub-prime mortgage debt is?

According to R3 Insolvency, a third of those with debt problems have not told their family or partner and a further 19% can’t even face opening their bills, while 21% said they ‘didn’t know where to go for help.’

Peter Sargent, president of R3 says: “Here lies the damming spiral of personal debt. Even after a long recession people are still terrified to ‘own up’ to debt problems. Yet this ultimately makes the issue worse – we know there is a group who are not addressing their financial problems and can’t even come clean to partners or family about them.

“In my years as an insolvency practitioner, I have seen many cases of people coming into my office with unopened bills. We need to break this cycle of fear. Even people who do seek advice usually delay six months in doing so.”

Simply, your debt problems will not magically go away and the chances of winning the lottery are not going to get any smaller. While you have your head buried in the sand the mortgage lender is still calling for interest, as are your personal loan and credit card providers.

So get some help. Talk to debt charities, talk to mortgage professionals, talk to your lender and talk to debt managers – just pulling your head out the sand is a big step forward and a massive boost in getting rid of your sub-prime debt problems.

SOURCE: R3, 02/04/10

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

The recent announcement by the Government to scrap stamp duty for all first-time buyer properties under £250,000 has meant there has been a surge in first-time buyers seeking out their first mortgage.

According to Moneysupermarket.com, there was a 15% jump in the number of prospective first-time buyers visiting its website since the Budget announcement. It’s been a tough few years for people trying to get onto the UK housing ladder, so the tax break couldn’t have come sooner for many who have been scrimping and savings for their first deposit.

The website also found that there has been a 17% increase in the number of 90% loan to value mortgages available and the number of 80% LTV loans available is up by a third. So not only have first-time buyers got a tax break but they also now have a better chance of getting hold of a loan.

Hannah-Mercedes Skenfield, mortgage channel manager at moneysupermarket.com, says: “As we approach one of the busiest times of the year for house-hunting, the first-time buyer could well be back out after months of hibernation.

“Whilst the majority of our users say the stamp duty cut is a good thing, and recognise that people need help to buy their first home, the reality is that until LTVs and corresponding loan rates improve, the situation remains largely the same. Without a large deposit, you’ll find yourself on a higher rate and that’s if you can get a mortgage at all. It will be interesting to see over the long-term what impact this has.”

If you think the time is right to get on the housing ladder, talk to a mortgage expert about what you have to do to get your first mortgage. You still need a large deposit and rates are still high, so it would be a good idea to get some help in getting your first home loan.

SOURCE: Moneysupermarket.com, 01/04/10

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

It is not just British citizens who have financial difficulties in the UK – many people from other EU countries are struggling with their British debts, and they must seek out professional help too.

The Consumer Credit Counselling Service says it has seen a rise in calls to its helpline from people living outside the country who are struggling to repay their UK debts. During the last decade, credit was so free and easy that those who had emigrated to the UK from the EU were tempted by debt. Also, many Brits have since emigrated themselves and are now struggling to pay back money at home.

The charity says over 500 people with debt in the UK but who live outside the country have contacted the CCCS already this year and 1,691 people called the helpline from outside the UK last year. It says the decreasing value of the pound has meant that people whose incomes are in sterling are using more of it to cover the cost of their living expenses. This then leaves them with less money to repay their debts.

Laura Carver, CCCS helpline manager says: “The decreasing value of the pound is the main reason that those living abroad are struggling to repay their debts.

“We have had people whose income had allowed them to life comfortably abroad, and although that income hasn’t changed, they have been left struggling to make ends meet by the decreasing value of the pound. Many are considering moving back to the UK.”

If you are a foreign national or a Brit abroad but have UK adverse debt problems, talk to a British financial adviser about your special circumstance. In the 21st century moving back home will not stop lenders finding you – and you are still responsible. So get some British help for your British debt problems right away before they escalate.


SOURCE: CCCS, 30/03/10

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

Adverse mortgage borrowers have struggled in vain to get hold of mortgage credit thanks to as much as £17,000 having been wiped off of their home’s value.

Recent research from MetLife found that the average household’s value to decline by £17,480, due to falls in the markets and house prices. This has meant those who initially had high loan to value mortgages now either own none of their home or are even in negative equity.

And mortgage lenders are now demanding much higher amounts of equity for people to secure a mortgage – the days of 100% mortgages are over and now many loans need 15%, 20% or even 25% equity. For many, that is a bridge too far.

But the good news is house prices rose by more than 10% in 2009 according to Nationwide, so some adverse borrowers might now be in a significantly better position. It might even mean they have gained back enough equity to get hold of a mortgage in this new age of prudent lending and tough credit criteria.

Dominic Grinstead, managing director of MetLife says: “The end of the recession in the UK is a genuine sign of hope for the future and it is undoubtedly good news that 2009 saw a rise in average household wealth. However, households are still counting the cost of stock market volatility and at £17,480 the cost is not trivial.”

If you think your fortunes have improved over the last year, talk to an adverse mortgage adviser about your mortgage potential. Any adverse mortgage borrowers would do well to speak to an expert now to make sure their home finances are in the best possible shape.

SOURCE: Nationwide, Jan 2010, MetLife, 24/03/10

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

There was some hope for the thousands of British people struggling to get onto the UK housing market after the Chancellor announced plans for a tax break for first-time buyers for the next two years.

The Chancellor Alistair Darling revealed that the Government would stop demanding stamp duty on all homes under £250,000 bought by first-time buyers, offering them a saving of as much as £2,500 – something that could go a long way in helping first-time buyers afford their first mortgage.

Hannah Mercedes-Skenfield, mortgage channel manager at moneysupermarket.com says: “This will be a well needed helping hand to many first-time buyers who have been struggling to step onto the property ladder for some time.

“Even a one per cent saving can make a significant difference to someone looking to buy their own home, particularly if that means they can now put down a cash deposit quicker or increase the value of their deposit.”

But moneysupermarket.com warns that banks still require a cash deposit of around 20% for a decently-priced mortgage and that there are still huge barriers in place for all borrowers – those without a big deposit will still face having to pay higher mortgage rates as a first-time buyer.

This is why, even with the tax break, first-time buyers must seek out professional mortgage advice. The break will help many people amass the thousands needed for a deposit but the mortgage rates for first-timers are still high and people need to be financially aware and prepared before they sign up to such a huge responsibility. A mortgage adviser can help in making first-time buyers more aware of what they are getting into and can help them prepare for a lifetime of successful mortgage repayments.

SOURCE: HM Treasury, moneysupermarket.com, 24/03/10

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.