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Mortgages And The Credit Crunch |
By:
Chris Clare |
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Mortgages and the credit crunch
Chris Clare
The onset of the credit crunch is making it ever more difficult to get a mortgage and you may have found that the credit score that you achieved last year does not lead to you instantly obtaining the best market rates this year.
To understand the situation you first have to be aware of what exactly is out there that is affecting your ability to get particular mortgage products with particular lenders. This issue is broken down into two parts. The first part is the credit crunch itself and the second part is how lenders score borrowers for mortgages.
The credit crunch has had a global effect on the mortgage markets and the UK's mortgage markets are feeling the pinch in a big way. The lenders are finding it increasingly difficult to obtain the money they used to and so you will find it increasingly difficult to borrow from them. The reason why the lenders are having a hard time raising funds is down to poor lending in the US with the companies supplying the lenders the funds no longer willing to take the risks on bad investments.
That is not to say that mortgage lenders cannot lend money. It simply means that the criteria for the borrowers is much more rigorous as the lenders do not want to risk lending out more money which they won't get back. Hence the second difficulty for borrowers. This strict vetting system is called credit scoring.
Credit scoring is a computerised system that lenders use to establish someones ability to borrow money. The higher a score the better the quality of borrower and the more likely the lenders is to grant a mortgage. The lower the score the less likely they are to grant a loan or if they do they will tend to grant that loan at a higher rate. This is known as sub prime lending.
Your credit score is established by a lot of factors and most of these factors are kept very secret by the lenders as they do not want you to manipulate it. But there are easy ways in which you can ensure that your credit score is as high as it can be. You need to ensure that your address history for the last 3 years at least is as stable as possible. Credit scores are affected by multiple addresses, so if you moved 6 times in the last three years this will reduce the overall score.
Being on the electoral roll is also a plus. The fact that you have voted from the same location for several years gives lenders confidence that you have stayed put and therefore stable for a significant length of time. This will give you more points.
Having a landline phone is also a must, it has to be said this does not have a huge effect but it is better than just having a mobile phone. Having a stable employment history is also a must again lenders do not want to see people changing jobs every couple of months this spells trouble and they feel it could leave you without a job in the future and them without mortgage payments.
The last and ultimately most important factor is your repayment history. If you have any credit cards or loans outstanding, the lenders will want to see that you have had a stable history of paying off your bills as and when they were due. It may seem that having no financial commitments would be good here, but actually having some credit works in your favour, as by showing that you pay it off well, you will look good as a potential borrower.
In conclusion, the best advise is to show your financial history in the best possible light and you should be able to get a mortgage just as you would have been able before the credit crunch. Always remember that it is a mortgage advisor's job to help you get the best out of your money, so never underestimate or overlook the professional help which they can offer you.
Mortgage Route offers information help and mortgage advice from qualified http://www.mortgageroute.co.uk) mortgage brokers coupled with no obligation http://www.mortgageroute.co.uk) mortgage calculators and sourcing tools.
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Article Source: http://www.PopularArticles.com/article152189.html |
Article: Mortgages and the credit crunch
Author: Chris Clare
Total Views: 38
Word Count: 710
Category:
Home /
Finance / Mortgage
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