Real Estate and Mortgage
Howard O'Gollegos
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Posts by Howard O'Gollegos
Remortgages For People With Bad Credit
Nov 16th
No-one’s perfect. I think most of us can probably remember a time when we have abused our credit rating, from being a few days late on a credit card payment, to receiving a final notice on the latest utility bill. Therefore, we can sympathise with those of us who have been continually rejected by Lenders based solely upon our poor credit. There are various reasons why an individual can have bad credit, from unexpected illness to County Court Judgements (CCJ’s) to bankruptcy or repossession. Bad credit can also be resultant of quick loans, for example ‘payday loans’ and Credit Cards as they create illusionary spending power, which prompts extravagant spending. This can often result in the borrower becoming trapped in a vicious cycle of loan dependency.
Most mainstream mortgage lenders won’t lend to individuals with a bad credit record. Although, there are various specialist lenders in the market who specialise in loans for people with bad credit; such firms usually operate exclusively through mortgage advisors and do not have high street branches but are usually owned by mainstream lenders that do. The term ‘Bad Credit Remortgages’ often comes under various guises including ‘Problem Remortgages’, ‘Sub-Prime Remortgages’ and ‘Non-Conforming Remortgages’ and are becoming common worldwide to raise money to pay off existing debts. Offers like poor credit history remortgages extend their benefit to help especially those who are struggling with a bad credit history and resultantly are forced to stick to an expensive mortgage schedule. Bad Credit Remortgages give the consumer stability with fixed low interest rates for reliable monthly repayments. They are designed specifically for individuals who have bad credit and therefore have easy and realistic terms which help the borrower manage their loans, thus paving way towards a better credit rating.
The advantages of obtaining a bad credit remortgage include that they don’t require you to more from your mortgaged property and they allow you to use the borrowed capital to pay off your existing debts. The lender will arrange an interest rate that’s also agreeable to the borrower and you will only have one monthly payment to meet (although, the agreement will be made to intentionally minimize the risk to the lender). Additionally, if you pay off your mortgage without defaulting and you keep to the restrictions, your credit history could be cleared within 3 years of your final payment. All the above ensures that the best remortgage terms can be enjoyed despite a bad credit record. The general idea is that you release some of the equity in your home and use this to repay your creditors. As with most things in life, these advantages are also teamed with various disadvantages of obtaining a bad credit remortgage. For example, bad credit remortgages change an unsecured debt into a secured debt as your property is secured against the loan. Therefore, failure to meet payments and stick to the agreement could lose you your home. Also, you must be highly ‘clued-up’ and wary when shopping around for the best bad credit remortgage deal as certain lenders intentionally set up great deals, but end up hiding various aspects of the contract. Most UK Financial Advisors will advise you to stay away from smaller; newly established companies that perhaps aren’t as strong as those owned by mainstream lenders.
There are a few useful tips that you might like to bear in mind when deciding if a Bad Credit Remortgage is right for you. You should always assess your lifestyle to ensure that you can factor in some internal discipline to cut expenses that are considered luxuries. Furthermore, you need to remain realistic; if you current mortgage deal is one that gives you little hassle, then it probably doesn’t need replacing. You must assess your monthly income; having a well paid and stable income will ensure that you can meet your payments with little trouble. In addition, do your homework; talk with both mortgage brokers and banks to see who can truly provide the best loan. Second, learn the ‘credit game’, be proactive and check your credit record before pursuing a home remortgage loan. For example, Credit Reference Agencies are able to provide you with a ‘Statutory Credit Report’ for a small cost of 2. The credit reference agencies in the UK, Experion, Equifax and Call Credit, compile information about your credit history and provide a report about your bill paying habits to creditors who subscribe to their service.
Bad Credit Remortgages are a great way to save temporary, short term money, but they are specifically designed as a financial last resort. Therefore, they should be treated as such and if you can find other affordable ways to build your credit rating then it would be advised to try those first. The more proactive you are in dealing with your bad credit now, the faster that County Court Judgement, late payment or Individual Voluntary Arrangement (IVA) will be behind you. It may sound like a huge list of ‘To-Do’s’ that may be quite time consuming, but once you have done your homework and collected all your financial reports, obtaining the remortgage itself should take no longer than a couple of weeks, and when you have that little bit more money in the pocket, the homework will undoubtedly be worth it.
This article gives some of the best advice on getting the best remortgage deals. Please visit http://www.justremortgages.com for more information on Remortgaging with bad credit.
categories: Finance,personal finance,mortgages
Remortgages And Secured Loans
Nov 11th
A Remortgage (or a Refinance Mortgage) put simply, is a loan that replaces an existing mortgage. This can be obtained through the existing lender or a different lender, depending upon the best deal for the individual. Remortgages pay off the original mortgage and are used as a means of releasing additional funds. There is some general confusion surrounding Remortgages and it’s relation to Secure Loans, as a part from being a type of secure loan, Remortgages can also be used to do or buy most things. One of the main differences between Remortgages and Secured Loans is that the former can be obtained for any sum of money you require, whereas the latter usually has a maximum restriction of 100,000. Furthermore, secure loans do not change anything about the current obtained regulated mortgage.
Remortgaging is an important financial decision to a homeowner, so understanding the options available is vital. There are various options available for the UK Homeowner. For example, Fixed Rate Remortgages tie you into paying a set interest rate for a specified period of time and allows for effective budgeting with monthly repayments that remain stable throughout the fixed rate period. A Tracker Remortgage is a variable mortgage whose rate is usually tied to The Bank of England base rate, whereas an Offset Remortgage is a deal that allows borrowers to offset the savings that they have against their outstanding mortgage debt. Whilst holding the savings in a separate savings account instead of earning interest on their savings, the borrower will pay a reduced rate of interest on their remortgage. A Bad Credit Remortgage also known as an Adverse Credit Remortgage is available if you have adverse credit history or have been refused credit in the past. There are multiple other forms of remortgages too including Variable Rate Remortgages and Buy-to-Let Remortgages. With such a diverse choice of remortgaging options, it is strongly recommended that you obtain advice in regards to which deal is the best for your circumstances.
With interest rates falling to their lowest over the past 19 months, it is clear that the housing market is the biggest section of the economy to have been affected by the economic downturn. The latest figures from the Council of Mortgage Lenders show that remortgaging fell to its lowest ever level as a proportion of new mortgages in August, with just 25,000 remortgage loans, down 13% on July and 19% lower than a year earlier. With the financial risk to the lender increased during the credit crunch, many bowed out of the housing market, happy to leave homeowners with their current mortgage deals. As lenders removed themselves from the market, banks were left in severe financial trouble and the government was forced to bail them out.
However, as of October 2010, banks are showing significant signs of welcoming back remortgage loans with the number of remortgages jumping a huge 35% in September. As a result of this, the remortgage market is now one of the most competitive, with banks and building societies reintroducing slashed interest rates. Remortgages now account for more business than properties, emphasising further its recent surge. Among the advantages of remortgaging is how it can help with the consolidation of higher rate debts such as credit cards or car loans. Similar advantages include; remortgaging to take advantage of a lower interest rate, to release equity, to pay for remodelling or expansion of your existing home or to pay for large expenses such as a child’s education or wedding.
However, there are some disadvantages that must be considered if you are contemplating remortgaging your home. For example, following the credit crunch, lenders have become increasingly stricter regarding who they lend to and how much they lend. This is a disadvantage to those who are newly self-employed as lenders will tend to regard their future income as uncertain and unreliable. Similarly, if it hasn’t been that long since you obtained your original mortgage and got it at a discounted rate you may face substantial penalties for early repayment. In order to qualify for a remortgage there are various steps to follow; your home must be valued, you must complete a detailed loan application, the lender will require conveyance work to secure a report and a solicitor will be engaged to ensure your previous lender is paid in full and to release any additional funds directly to you. The cost of remortgaging varies depending upon the lender, but in general, it will probably cost less than when you first obtained a mortgage!
Make sure you shop around to find the best remortgage deals, and the lowest posssible remortgage rates for your circumstances.
categories: remortgage,mortgage,money,finance,personal finance,loans,property,realestate,debt
The Benefits Of Development Finance
Nov 10th
A question that is frequently asked is: What is the difference between Development Finance and Commercial Mortgages? And this is where the confusion often stems. Development finance is where an individual or company/business is looking to develop property/properties and have some capital but need a short term loan to help complete the development. Depending upon the lender and the circumstance, such loans normally span between 12-24 months. Commercial Mortgages on the other hand, are usually only required once the development has been completed and additional funds are necessary. Hence, Development Finance and Commercial Mortgages do tend to overlap. Despite the “Credit Crunch”, Development Finance is rapidly becoming more main-stream and is a very specific type of finance. Development finance is an extremely active market, with businesses wanting to expand for survival during the economic downturn. There are many high street lenders out there and therefore there is a wide variety of development finance specialists available to the consumer. It is recommended that you seek professional advice in order to find the right deal for you.
Typically in the UK, Development Finance is used for various development plans such as; Property Refurbishment, New Build Projects, Property Conversions and initial land purchase and international projects. Additionally, there are various types of Development Finance which undoubtedly adds to the confusion and uncertainty surrounding the term. For example, a Senior Debt Loan is the most popular as it covers the first 70%-80% of loan to value and a Mezzanine Loan is second to the above form and helps the developer if his money is tied up elsewhere in different things. It is to be noted that this is by far a definitive list.
Property development is about having a vision; it’s about understanding the market and turning that vision into a reality. However, developers often have problems getting the finance right and knowing what products are available and which lenders to use can be confusing. Which form of development funding is right for you, depends upon your vision, whether you are a homeowner looking to invest or a company wishing to expand. There is also finance available for community projects which provide financial support to businesses and individuals in disadvantaged communities. Therefore, Development Finance is determined entirely upon an individual assessment made by the lender. In order to determine who to lend to, lenders assess various aspects of the development proposal. For example, ground work and services, land purchase and footings/base before coming to a final conclusion. In the difficult current market, lenders have to be more careful when choosing which developers to back; they are much more likely to support a developer with experience in the field than someone new to the industry.
Development Finance lenders are there to build a relationship with the developer in order to share their vision and provide the support needed to make that vision a reality. The loan can cover costs such as building costs, labour and can often include any architect costs and other professional fee’s such as wages and drawings. Property development loans will be secured against the land or the property you wish to develop. Traditional forms usually require a 20%-30% deposit, whereas more recent forms are now available for debt, to release equity or mezzanines.
Loan to Value rates and interest rates vary depending upon experience and percentage of funds required for development. Benefits of this form of finance includes that each development case is assessed on its own merit and it’s a form of finance that can be raised quickly, putting your development project into fruition as soon as possible. Furthermore, the development lender will be on hand to support the client with advice on their development throughout the process and the same person, who authorises the funds, will work with the client to manage throughout the Development Programme. No matter what you decide to do with your completed project, whether you plan to sell in order to start the next project or whether you retain the project for investment purposes, Development Finance is a flexible solution to suit your financial needs.
Whenever considering any financial product it pays to shop around, so please do research the market to ensure you get the best commercial mortgage rates available, and are aware of all the options when it comes to commercial property finance.
