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.
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.
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
Second Charge Mortgages can be considered as a viable solution for debt consolidation, and they provide products that are affordable and sustainable.
There are few restrictions on meeting criteria and they can offer full consolidation almost no matter what the level of unsecured debt. This reduces your monthly commitments and outgoings, as many of these debts are a percentage of loan outstanding each month, and often place a financial strain on you.
We can help you on the journey back to high-street lending.
No limit consolidation
Loans up to £1,000,000
Loans of up to 95% of your property value
All credit profiles considered
Here, we don’t rely solely upon generic or data-driven, tick-a-box sourcing systems. Around half of our cases have found a better solution and interest rate by being underwritten manually, compared to those presented electronically, as we have a deeper understanding on the human side of underwriting and lending. Your personal circumstances are always taken into account.
We rely on a team of personnel that are minimum CeMAP qualified (the industry standard) and with a minimum of 5-years experience in second charge mortgages and loans, therefore you can be assured of a responsible outcome.
Let us say “Yes, we can help” – Second charge mortgages
These are much more competitive than you may realize, and are often comparable to regular mortgage rates, with a choice of variable or fixed rate options.
Second charge lenders may be more flexible than first charge lenders. Both types of loan are heavily regulated, with the intention of providing the best advice for you, the consumer, however, second charge underwriting often follows a less stringent set of rules, and the lender underwriters are able to treat you as a human, not a number.
Adding a partner.
It is often possible to add a partner to a second charge, allowing income to be considered for both parties.
Requirements such as home improvements, debt consolidation, tax bill payment, school fees, holiday home purchase, all of these and many more, are acceptable purposes.
Interest-only products are available at very competitive rates, and, as there is no structured capital repayment built-in, these can be a very affordable alternative in many cases.
Dedicated and experienced underwriting teams work very hard to turn around cases in record times. Secured loans are very much faster than mortgages and remortgages.
Let us say “Yes, we can help” – 6 reasons why you should consider a second charge loan
The FCA is warning consumers about avoiding loan fee fraud.
The Financial Services Authority has issued a public warning after consumers lost three and a half million pounds in fraudulent loan applications last year.
The regulator says it has seen a big increase in this type of fraud, with the number of people complaints about such scams rising by 44 percent from 2016 to 2017.
These scams typically target those who are in distressed financial circumstances and looking for a short-term loan.
When searching for loan providers online, customers are contacted by an unregistered firm informing them that they have been approved for credit, provided they pay an upfront fee.
The FCA says some customers are persuaded to pay multiple fees, with the average loss being £740.
The regulator added that research shows that seven out of ten consumers (72 percent) had not heard of such lending scams. It urged people to check that a loan provider is authorized by the FCA.
An FCA officer said: In 2017 there were 4,700 reports of loan fee scams made to Action Fraud. It has now overtaken investment fraud as the most common scam reported to the FCA. Scammers often target the most financially vulnerable, on lower incomes and with poorer credit ratings.
This issue is somewhat complicated by genuine loan brokers charging a fee for their services, but fees are not normally paid upfront, other than the cost of a property valuation. Such brokers should be fully authorized with the regulator, and if the loan does not then materialize, consumers have a right to redress. StepUpLoans.co.uk and Step-Up Finance are fully authorized and regulated by the FCA (Register number 303044) and our details can easily be found on their website. All of our Lenders are also fully authorized, and therefore accountable.
Many thanks to the FCA for the information contained in this post.
Let us say “Yes, we can help” – Avoid Loan Fee Fraud