If you have been considering fixing your mortgage by remortgaging to a new deal, then now might be the prime time to do it.
Fixed-rate mortgages have been dropping steadily for several months with the expectation that interest rates in the UK will remain low in the long term.
However, the downgrading of several major banking groups in the UK by the rating agency Moody’s last week is likely to put pressure on the big UK mortgage lenders to increase the cost of these deals.
It could be a flash in the pan, rates were beginning to rise early this year when the economic outlook was less gloomy, but the effects of the Tsunami in Japan and the subsequent concerns over the Eurozone were enough to revert the trend.
What is certain, though, is that there are fixed-rate mortgages available which are several per cent lower than the average mortgage interest rate paid by borrowers over the last 25 years; so if you are concerned by the possibility of higher rates and don’t have too much to lose by switching to a fixed-rate deal; there have certainly been far worse times to take a fixed rate.
We have recently launched the first of several new mortgage calculators, which aim to provide much more sophisticated systems for borrowers to assess their lending ability online.
The most important of these new calculators is the maximum loan calculator, which models some of the more complex systems for affordability lenders are using to assess customers borrowing potential.
Lenders are increasingly stepping away from using pure income multiples, and the large high street banks and building societies now consider many factors: including credit scoring, the number of financial dependents and overall debt-to-income ratio, to decide on an appropriate borrowing figure.
The calculator is (as far as we are aware) the only one currently available which illustrates how different types of lenders’ calculations vary, taking into account dependents, existing credit commitments and credit scoring.
We have several more new tools in development, soon to be added, so keep an eye out for more coming soon.
Over the past few weeks new mortgage lenders have been popping up at quite a pace, with Platform Igroup and Kensington all returning to the market after considerable time away there is at last some possibility for clients with less than perfect credit history to obtain new mortgages although loan to value limits are still strict.
These lenders maintain adamantly in the press that they are lending to prime borrowers only however the truth is that they are lending to customers who would have been considered near prime or very light adverse in the days preceding the credit crunch.
To boot this week also saw the announcement that Aldermore mortgages had opened its doors to the main intermediary marketplace for both residential and buy to let loans, as well as Precise Mortgages adding further new options in the Buy to Let mortgage marketplace.
Kensington and Igroup in particular have filled the much needed whole between highly competitive high street residential mortgage rates and ultra high adverse rates offered by the likes of Platform and Cheshire Mortgage Corp. They have rates ranging between the 4-6% mark which are much more palatable than 8% plus offerings from the other two.
For further information on any of the products from these new lenders speak to one of our independent mortgage brokers on 0845 4594490
With many borrowers now falling fowl of credit scoring, it’s a great time to take simple steps to improve your credit score; here are some tips on how to do it.
Improve your payment history.
Simple budgeting steps can help improve your credit score by ensuring you always make your minimum payments on time. Setting up direct debits and checking there are always sufficient funds for these payments is pivotal to a high credit score.
Work to a budget.
It can be easier to stay on budget if you work out your fixed monthly bills (e.g. mortgage, car insurance, gas) and transfer your spending money to another account by standing order.
It is simpler to manage when you come to the cash machine. Just make sure you always leave a little extra in the account for bills in case they are higher than expected.
Update your information.
Make sure all your important information is up to date. Credit scores can be improved by ensuring your personal information is consistent and accurate across all sources.
Human underwriters still make many decisions, so it is always good to check everything ties together, such as your driving license, bank details and electoral roll, and that all are accurate & up to date.
Limit credit applications.
When you apply for credit, it is recorded on your credit file. If these increase rapidly, a lender may think you are in financial difficulty or have concerns about fraud. So shopping for a new phone and a store card may be best left until after any mortgage application.
Check your credit report.
It is now possible to check your credit report, so ensure that information is correct, particularly regarding public record information about CCJs, repossessions or bankruptcies and the financial connections section.
If there is anything on a credit report you do not understand, or if you are regularly refused credit for no apparent reason, it may be worth speaking to a mortgage broker or advisor.
