Credit Scores will be protected during the Covid-19 period when payment holidays are being taken, say the three main credit reference agencies, Experian, Equifax, and TransUnion.
During March 2020, the Government announced that homeowners impacted by the current crisis could ask their mortgager lender for a payment holiday of up to three months, for both Residential and Buy-to-Let customers. The agencies are implementing a special measure called an `Emergency Payment Freeze’ to ensure that credit scores are protected for the duration of an agreed payment holiday. Our understanding is that individual credit reference files will not show a missed or late payment, which is of critical significance to keep credit scores intact, and whatever the individuals score level is, this will not be negatively affected and remain unaltered until after the `freeze’.
In addition to the Government guidance on mortgages, lenders may also be able to make special arrangements across other forms of credit. These may include payment holidays, reduced payments, paused payments or increased credit limits, all covered by the `freeze’ arrangement.
However, what is not known when moving forwards, is how lenders will view the borrowers needs when having taken a payment holiday. The individuals score may not be affected, but the diligence of heightened underwriting and assessment of lender risk may come in to play. Lenders do not like risk, they do not like lending to those who have demonstrated an inability to maintain payments.
The remainder of 2020 will certainly become the New Normal, as was the effect of the 2008 crash.
In these unprecedented times, engaging with an experienced Authorized and Regulated Independent finance broker has never been more important. My 27 years of finance experience will often be the difference between a potentially successful outcome, or as I have often seen, failure and disappointment when a customer opts to directly use an online application with a Company of which they know nothing about.
Over the last couple of weeks, we have seen Covid chaos, with many lenders stopping lending altogether, often a combination of volumes of existing customers seeking payment holidays causing internal cashflow issues, plus their own funding lines of credit having more stringent covenants imposed. Others have seen their funding dry-up as private investors withdraw their support, or, the threat of not being able to enable Securitization.
All is not lost, however – there are still many positives in the Personal, Business and Buy-To-Let finance market, with the caveat that if you think you want it, then ask now, whilst terms remain favourable.
So, just what is available during this Covid chaos?
First Charge Mortgages:
Estate Agents – Closed.
Surveyors and Valuers – Pretty much closed.
Removal firms – Closed.
Therefore, the logical conclusion is that the property market has become totally stagnant apart from re-mortgages, re-finance, debt-consolidation, product transfers and those seeking a new lender to replace their existing expensive Standard Variable Rates, some of which are still in the 6 to 8 percent ranges, despite the recent Bank of England Base Rate cuts to just 0.1 percent.
Yes, underwriting has become ever-more cautious, yes, more property equity is needed, but yes, many options and solutions remain available, although more hoops of fire to jump through.
Second charge lenders are still lending, with a desktop or drive-by valuation available for loans up to £200,000 and maximum LTV’s of 80%. Higher limits are possible but at a premium, with tightened underwriting. In certain areas, some surveyors are willing to visit properties and guarantee there is no risk to you, the applicants. Additionally, work and employment circumstances will be looked at both sympathetically and sensibly. A loan is often ideal for the consolidation of escalating unsecured debt into a more manageable payment, particularly if a remortgage, further advance or unsecured loan is inappropriate or unavailable.
Fact – We are about to see a vast reduction in the number of lenders operating in this market, and full-status lending criteria may become bordering upon almost impossible to meet, with only a select few being able to access funding. There is a strong probability that lenders will want to see a higher degree of equity available.
However, non-status loans remain available, meaning that you need not have a perfect credit history behind you in order to achieve your objective.
I have not seen these levels of lender attrition and fall-out since the crash of 2008. Knowing which lenders will still be around once the crisis is over is something I have continually monitored and reviewed, building experience and data upon, and calculating likely responses – lenders are a business, they are not immune to what is happening globally. My stance is very easy to explain, never ever, ever go for cheapest, go for what works and who can deliver. It is also helpful during these times to consider lenders who offer desktop and automated valuations, removing the requirement of a surveyor visiting the property.
If you think that you may need finance for whatever reason, either Personal, Business, Buy-to-Let, or Debt Consolidation, then please act now whilst channels are open, you can thank me later.
And as always if you need to talk, discuss, enquire or whatever, do give me a call – I’m here to help.
May I wish you, and your families, personal safety during these uncertain Covid-19 times.
There are currently some very serious issues in obtaining First Charge, Second Charge, Third Charge loans, and mortgages.
No, this isn’t designed to be sensationalist or be a sales message, this is written in very earnest seriousness whilst watching to Coronavirus develop and affect the money markets.
There is a very real scarcity threat looming ahead.
One Pound Sterling £1 is now worth roughly 1 Euro, under $1.2 USD, and around $2 AUD. The FTSE and Dow Jones have taken massive hits, crashing almost 10% in one day, and some say property prices may also suffer here too; I’ve heard figures of up to 30% price drop being talked about.
In times of dire uncertainty, lenders and institutions will always revert to a knee-jerk reaction, often citing others as a reason for their responses, and with massive Directors’ salaries and bonuses at stake, who can blame them for their own self-preservation of profit and self-interest – But that’s not really helping you, is it?
This week alone, I have seen 4 lenders fully withdraw from lending anything to anyone. They are closed for all business. There is an ever-growing list of others who are retracting, tightening policy and needing greater certainty (and equity) from their clients, often changing the rules after an application has been made – This applies to both personal borrowings and Limited Company business borrowing, indeed, certain sectors of routine trading are now Blacklisted until further notice.
In the last two weeks, we have seen the financial woes of 2008 coming back, but this time it isn’t self-made, it’s from Worldwide external events. This week, over 800 residential and BTL products have been withdrawn, and over 1,000 criteria changes have been made to individual lender underwriting rules, and it’s about to get a whole lot worse.
So, what does all this mean, to you?
Well, let’s look at some pertinent facts.
Trace back over the last 30 years and you will see that I was RIGHT about Endowment mis-selling, PPI mis-selling, Pension mis-selling, Mortgage mis-selling, the LIBOR rigging, Pension Transfer mis-selling, Property Market crash, Sub-prime Mortgage disaster, Self-Cert Mortgage issues – The list goes on and on – therefore I am probably right in my current thoughts too.
I am seeing the undercurrent of scare tactics arising, from the media reports that you can Google for free anytime you want – It’s the behind-the-scenes reality, and the daily dealings with lenders of all shapes and sizes, that you won’t have exposure to. So, when Zoopla predicts property sales are set to reduce by 60% it is time to consider just WHY they are saying this, what their thoughts are and what evidence this is based upon.
Lenders are like shoals of fish – when one moves and changes direction, the rest follow instinctively and in unison. I prefer to work with the free-spirited fish that can think for themselves and make decisions that are based upon fact, not fear – There are always solutions to problems, there are always lending sources that remain open, and thrive, in times of crisis.
Last week we saw the Bank of England cut their Base Rate from 0.75% to an unprecedented 0.1%, yet immediately, as a knee-jerk reaction, many lenders immediately announced that their product rates were being increased. The net result? Borrowing instantaneously became, in effect and on paper, over 1% more expensive. Additionally, many Base Rate Tracker products were withdrawn, leaving only Fixed Rate products available, and at a higher cost. With higher rates comes increased stress-test strain, combined with more rigorous underwriting, engineered in such a way that only the fittest and financially strongest can get what they either need or want. Combine all of this along with loss or decline of income and you have a melting-pot of serious problems brewing-up. Therein lies the problem.
Going back to the title again – “If you want it, do it now”
By now, you can see the logic of this: If you even THINK that you may need finance for whatever reason, either personal or for business, then please act now whilst channels are open, you can thank me later.
And as always if you need to talk, discuss, enquire or whatever, do give me a call – I’m here to help.
May I wish you, and your families, personal safety during these uncertain Covid-19 times.
You may already know this, however, many people remain unaware that HMRC no longer accepts card payments.
This applies to both personal and business tax – You can no longer pay your Tax bill or Tax demand, nor NI Contributions using a credit card. The thought process is that “if you need to pay tax upon earnings, you have already earnt the money, therefore there should be no need to borrow it”.
However, although you can’t borrow on credit cards, you are still allowed to borrow, or capital raise, using personal or business loans.
Here are a few solutions to consider:
Regulated Second Charge, Third Charge, or Equity Loans
There is a massive choice of up to 100% of your property value – even with a little adverse, such as missed payments or other minor credit issues
Interest rates start at around 3.5% and depend upon your personal circumstances
Heavy adverse such as CCJ’s and recent mortgage or loan arrears are considered at up to 75% of your property value
Proof of the affordability of borrowings will be required but there are lenders available with no Loan-To-Income cap, and those who take a sympathetic view on contractors, benefits, etc.
Loans are available for both personal and/or business tax demands or bills
Some lenders will make an advance to a business and secure the loan upon the main residence
Start-Up loans or poor trading accounts – Some lenders will consider using your cash flow forecasts
Some lenders will lend without equity or, indeed, will consider lending on a totally unsecured basis, even with adverse credit if the story makes sense
We have numerous lenders covering specific different geographical areas in the country – Ask us what’s available in your area
When borrowing over more than one year to pay a tax bill, perhaps you should ask yourself “what’s the plan for next year?” so that you don’t dig an even deeper hole with HMRC.
Taxes are unavoidable, and poor planning of payment can cause enormous strain upon you, your family, or your business – Watch out for tips we will be providing in further articles.
Did you know that, on average, 340 mortgage applications will be declined today?
Small comfort, especially if it was you who received the No.
Specialist lending is an area of growth, it is rising from the need for solutions to consumer problems that the high street lenders cannot hope to solve. These high street names have massive reserves, as dictated by Regulation. The media-hype leads us to believe these lenders want to help, however, this is a far cry from the truth, the simple fact is that they do not want risk, they will not consider risk, and they will not lend where a risk may even be of their own perception and making.
Yet the very fact they perceive there is a risk, does not, however, mean the risk is real.
As peoples’ lives change and evolve, mortgage and loan applications will continue to increase in complexity, and complexity does not sit comfortably with risk appetite, nor tick-a-box criteria checklists. Therein lies the problem… You cannot fit a round peg into a square hole – you need a corresponding round hole for everything to fit well.
Anyone classed as complex, outside-the-box, or having minor adverse credit, now has the chance to obtain mortgages and loans that until recently, were simply not available mainstream.
How are needs changing? Here are a few thoughts for you, in answer to the question “Why was my mortgage declined?”
Since 2008 (the year of the Crash) there has been a 25% increase in self-employed workers
Over 1 million people are now on Zero-Hours contracts
1 in 7 people will be over 75 years old by the year 2040
On average, 3,311 County Court Judgements were registered every day during 2017
Consumer debt is growing, it has already reached £1.59 Trillion
Credit blips, missed or late mortgage, loan, credit card or utility bill payments, are becoming ever-more common.
Here at Step-Up Loans, we are proud to boast that as an Independent, we have access to the whole marketplace of lenders, not just a few favourites or a restricted panel. If it can be done, we are able to do it, whether it is for personal use or business purposes. Whether employed, self-employed, zero-hours or a contractor. Whether you are 21, 61, or 81. And in certain cases, whether you are not a homeowner but are able to have a Guarantor who is.
Your best plan is to call us directly – Everyone is different, everyone has a story to tell.
Let us listen to your story and find the solution that’s needed.
Let us say “Yes, we can help” – Have you had a mortgage application declined?
Are you looking for a Remortgage or a Further Advance?
You can count on us to find the right home for your needs.
Thousands of second charge mortgages have been arranged in recent years, from an extensive panel of lenders across the whole of the marketplace.
They can be a great alternative for you when:
You fail an affordability test with your main first charge mortgage lender
You have an Early Repayment Charge on your first charge
Your current mortgage is Interest Only, and any changes would withdraw this option
You are benefiting from an existing low mortgage rate but want to raise capital
You are wishing to capital-raise for business purposes, including deposits for buy-to-let mortgages
You are keen to retain your current mortgage product but now have historic adverse credit.
Additional factors include:
Up to 100% of property value may be possible
Interest rates are comparable with regular mortgage rates
Variable rates and fixed rates are available, fixed for up to 5 years
The loan term may be from only 3 years, running all the way up to 30 years
The loan amount may be from £3,000 to £1,000,000+
You may be an Employee, Self-Employed, Expatriate, Portfolio or first-time Landlord or a Limited Company
There are usually no Early Repayment Charges associated with Second Charge Secured Loans
Any questions? Get in touch today.
Let us say “Yes, we can help” – Have you considered a second charge loan?
Second Charge mortgages can offer the ideal alternative to a remortgage, further advance or unsecured loan. This is why they can be really useful for those who desperately need to reduce their monthly outgoing costs.
Here’s how a customer was helped to reduce their monthly outgoings by £291 a month, in just 6 days from the application being received from the customer:
Unsecured debt balance: £25,000
Average monthly payments: £666
The client needed to consolidate her debts to reduce her monthly payments. In addition, she wanted to finance a new bathroom at a cost of £5,000.
The client did not want to raise additional finance through a further advance, or a remortgage due to the resulting high redemption penalties.
The client had already been rejected for unsecured loans because of her high outgoings.
Plus, the client wanted protection against possible rate increases for 5 years and the ability to overpay without penalties.
In just 6 days, the customer received their funds:
£30,000 over a 20-year period
Monthly payments reduced to £375, which is a £291 reduction in their outgoings each month
Fixed-rate for 5 years
No Early Repayment Charges, allowing them to remortgage later, or make overpayments anytime
With rates from around regular mortgage rates and loans of up to £2,000,000, Second Charges can be used for a wide variety of both reasons, and clients. So why not contact us now?
Let us say “Yes, we can help” – A reduction in outgoings
I would recommend that you take a quick look at some of the key elements below. Perhaps you, your family or friends fall into one or more of these areas?
Here at SUL, I still have access to the largest second charge panels in the marketplace so if I can’t place a case, I doubt anyone can. I remain fully Independent. Feel free to contact me using the details below this article.
For Residential Owner-Occupied Homes
Examples of acceptable circumstances for Contractors and those with short work history:
6 months contract or a rolling 3-month contract renewed at least once
Umbrella companies acceptable
Contracting less than 12 months – Weekly contract rate x 46 (minus expenses)
Only 1-year track record of employment in the same line of work required
Acceptable Properties; usually unacceptable for mortgages:
Ex Local Authority flats/maisonettes
Flats above commercial premises
Flats above take-away, restaurants, pubs
High rise flats and deck access
For those with large families:
Up to 4 applicants accepted with all incomes considered
Second charge applicants do not have to be on first mortgage
Borrowing may run into retirement
Up to age 85 at end of term
Current income used if retirement is more than 10 years away
For cases where Interest Only is preferred:
Up to 60% of property value can be used
An investment vehicle or downsizing may be used as an exit route
An Impaired Credit History is acceptable
Current Debt Management Plans may be considered
Up to 3 CCJ’s and 2 missed mortgage payments are allowed, up to 70% of the property value
Up to 3 missed unsecured payments in last 6 months are allowed
Telecoms missed payments ignored
Buy to Let
Owned personally, by a trading company or an SPV
Portfolios of up to 15 properties
Older or retired landlords – interest only up to 75% of property value and up to age 95 at end of term
Expats – No minimum income required
Impaired credit plans available
HMO’s up to 8 bedrooms and multi-unit blocks up to 5 units
Many independent lenders have numerous individual underwriting niches which on their own are valuable and can fill the gaps on tick-box circumstances.
Let us say “Yes, we can help” – Even more reasons for a secured loan