How can I apply for a remortgage?
If you are a homeowner and want to borrow cheaply to pay for home improvements or to refinance expensive debt, it makes sense to apply for a remortgage. Mortgages are normally the cheapest form of borrowing and there are many low rate remortgage deals. We would recommend that you use the internet to research online remortgages to find low rate remortgages. You can go direct to a mortgage lender or to a finance broker to obtain a remortgage quotation. Always seek independent advise from a qualified advisor – seek personal service from someone who is looking after your best interests. Remember that the UK mortgage market is huge and that there are many residential mortgage lenders out there who want your business – you can be choosy! Do not rush into a deal.
Mortgages are secured loans available to homeowners, so the more equity you have in your property means a lower loan to value (LTV). If your loan to value is less than 80% you will find it easy to obtain a low rate mortgage or remortgage.
back to top
What is a commercial mortgage?
If you are looking to expand your business or save money on rent, you can buy a commercial property using a commercial mortgage.
If you already own commercial property, you can raise cash by taking out a commercial mortgage. If you have a mortgage secured on commercial property and you think that you can borrow at a lower rate, then you can apply for a commercial remortgage. Commercial property are buildings such as a shop, an office, a factory or a warehouse.
back to top
I have a bad credit record. Can I still
get a mortgage or loan?
Yes.....The terms you are offered, however,
will vary according to how big a risk you appear to be. If
you have CCJs, Defaults or Arrears, you can expect to pay
a higher rate of interest. Generally speaking, you will find
it far easier to obtain a secured loan rather than an unsecured
loan. In the former, the lender's risk is limited by the
security, normally property, on which he is lending. In the
latter, the lender's risk is largely determined by the ability
and willingness of the borrower to repay.
The vast majority of lenders use one of
two major credit reference companies, Experian and Equifax,
in deciding whether to grant credit. These companies hold
credit files on nearly all of the adult population of Britain
so if you, or someone at your address has defaulted, has
a CCJ or otherwise has had financial problems, then it's
going to be on record.
Your credit record is usually searched every
time you apply for a loan, hire purchase, store credit or
any other form of borrowing. So your credit history affects
the terms you are offered or whether you can obtain a loan
at all. The High Street banks and Building Societies tend
to be very conservative in their lending policies and may
turn down applications from anyone who has experienced significant
credit problems.
However, there are many well established
and reputable financial services companies who will offer
loans and mortgages based on your present circumstances rather
than your history. There are also many brokers or intermediaries
who advertise a specialization in helping people with a bad
credit record. However, be careful as many charge a fee just
to try to obtain credit for you without any guarantee of
success. We would advise that you only deal with reputable
brokers who are members of well-known trade associations,
such as the Consumer Credit Trade Association. Brokers who
specialize in secured loans may describe themselves as FISA
registered, meaning that they must follow the code of practice
set by the Finance Industry Standards Association.
back to top
How can I improve my Credit Rating?
We would not advise that you get involved
with so called 'credit repair' companies as they don't do
anything that you can't do yourself.
Make sure there is no incorrect information
on your credit file, which is affecting your credit rating.
You can check this by applying for a copy of your file as
shown below. If you believe strongly that your credit file
is unrepresentative of your credit worthiness, you can ask
the credit reference companies to insert a Notice of Correction,
which must be then viewed by everyone who sees your credit
file.
Make sure you are on the electoral register
as lenders use it to confirm your name and address.
Do not become frustrated when you are turned
down for credit. The number of credit applications you make
is recorded on your credit file and is used by many lenders
as part of their credit scoring systems. Do not keep applying
again and again. It can be a vicious circle with lenders
turning you down just because other lenders have.
Ensure that you and other family members
pay your bills on time. Do not exceed your credit limits
on credit cards and other revolving credit. Do not exceed
your bank overdraft. Apply for new credit accounts only as
needed.
back to top
What's the difference between secured or unsecured loans?
Secured Loan
A secured loan is secured on your property by the lender.
This means that the lender is minimising the risk of losing
any money and so can offer a secured loan at a lower APR
(Annual Percentage Rate) than an unsecured loan. A Secured
Loan is also easier to obtain as adverse credit history
such as arrears, defaults or CCJs can be largely discounted.
In the case of a good credit history, some lenders will
offer secured loans in excess of the equity available in
the property. In all cases with secured loans you should
be aware that your home is at risk if you do not keep up
repayments on a mortgage or other loan secured on it.
Unsecured loan
An unsecured loan costs more in repayments but does not carry
the risk of you losing your home, as in the case of a secured
loan. If you don't repay an unsecured loan, the lender
can't take your house off you. For this reason, it's often
difficult to get an unsecured loan if you have an adverse
credit history. An unsecured loan should have the advantages
of being faster and cheaper to take out. It can also be
more flexible and the borrower may feel that he/she has
far greater control of it.
back to top
Credit Checking and Credit Files
No-one has a right to credit. Before giving
you credit, lenders - such as banks, loan companies and retailers
- want to check whether you are an acceptable risk.
To help them do this, they may check with
firms called credit reference agencies to get some basic
details about you and your credit record.
These agencies do not keep blacklists or
give any opinion about whether or not you should be given
credit. They simply provide information about your credit
record. It is the lender who decides whether you are an acceptable
risk.
To get a copy of your credit record, you
can apply to one of the main agencies either on-line:
or by post, You'll need to give your full
name (and maiden name if appropriate),date of birth, current
address, including house number, street name, district, post
town and postcode plus any addresses lived at during the
last 6 years.
Enclose a cheque or Postal Order payable
to your chosen agency for the statutory fee of £2.00
and send your letter to:
Equifax
Plc
PO Box 1140
Bradford
BD1 5US |
|
Experian
Consumer Help Service
PO Box 8000
Nottingham
NG80 7WF |
|
Callcredit
plc
PO Box 491
Leeds
LS3 1WZ |
Credit
scoring
Many lenders use computerized credit scoring systems which
allocate points to various pieces of information given on
your application form, such as your age, marital status,
your occupation, whether you own your home and whether you
are on the electoral register. These points are added together
to produce your credit score. This helps the lender predict
whether you are an acceptable risk.
Different lenders have different systems
and pass marks, so you can be turned down by one but accepted
by another. Your credit score is not part of the file kept
on you by the credit reference agencies.
Lenders do not have to tell you exactly
why they have turned you down, but they should give an indication
of the reason.
Your rights
If you are refused credit you have certain rights. In
particular you have the right: to know the name and address
of the credit reference agency that the lender contacted
for details about you; to see any information held about
you by that agency; to correct any inaccurate information.
You must act within 28 days of the last
time you contacted the lender about the credit deal. The
OFT's leaflet No Credit? gives more details about your rights
to see your credit record and amend it. The Data Protection
Registrar may also be able to intervene in a dispute with
a credit reference agency.
back to top
What do I need to consider before buying
on credit?
Most people at some time will use credit
to purchase goods or services, for example, by obtaining
a personal loan through a bank or building society, hire
purchase, or a credit agreement with a trader. Before buying
anything on credit you should consider the following points.
Work out what the total cost of the loan
will be. Can you afford the repayments? Look at the length
of the loan not just the monthly repayment. The longer the
loan period, the more interest you'll pay back.
Shop around for credit to get the best deal.
There are many different types of credit, which all charge
different interest rates.
Check the APR : the Annual Percentage Rate
of charge is an expression of the total charge for credit
for each year of a credit agreement. Generally speaking,
the lower the APR the better the deal. Sometimes a low APR
is only offered for a short period. Some traders offer interest
free credit (0% APR ) but you will need to take care that
you are not paying higher amounts in other ways; for example,
it may be a higher cash price than you would pay for the
same goods elsewhere.
Make absolutely sure you have read and understood
all credit agreements before signing them. If there is anything
you do not understand, ask.
Check whether the loan has a variable rate
of interest. If it has, your repayments can go up as well
as down. Make sure you can really afford it.
Watch out for other charges, such as a broker's
arrangement fee.
Is PPI (Payment Protection Insurance) included?
Have you asked for it? You don't need to take out PPI if
you don't want to. It can be expensive and may not cover
you if you are self-employed or on a short term contract.
Some loans are only given if they are secured
on your home. These are not available if you rent. A secured
loan gives security to the lender, not to you. If you cannot
keep up with the repayments the lender can sell your home
to cover any loss. You might get a lower rate of interest
with a secured loan but you could have a lot at stake.
back to top
Can
I cancel a credit agreement?
You have a short time in which to change your mind.
When you sign, you should be given a copy
of the credit agreement, which sets out your cancellation
rights.
You cannot normally use your rights to cancel
purchases made with a credit card because you will have entered
the agreement for the card some time ago
back to top
Can I withdraw from a credit agreement?
You can withdraw from any agreement before
it has been signed by both you and the lender. This means
acting quickly.
If you have already signed, you will have
to let the lender know that you have changed your mind before
they sign. It's probably best to phone, fax or e-mail and
then confirm by post.
The effects of withdrawing are the same as cancelling.
This is particularly important with agreements
secured on your home where the lender must send you an advance
copy of the agreement at least seven days before sending
the actual agreement to be signed.
The lender must not contact you during this
consideration period to give you time to think about the
deal (but you can contact them.
back to top
What are credit brokers' fees?
If you use a broker to get a loan, including
a mortgage or a loan secured on your home, you will probably
be charged a fee for the service.
Make sure you know what this will be before
you commit yourself. If, however, you do not enter into a
loan agreement within six months of being introduced to a
possible lender, the broker can only charge a fee or commission
of £5 and if you have already paid more you can recover
the excess.
Similarly, other fees, such as a survey
fee paid to the credit broker in connection with a loan that
you do not eventually take up, are also refundable if you
are borrowing £25,000 or less.
back to top
Is there extra protection when using
credit?
Yes - buying on credit does give you some extra rights,
for example, if goods are faulty.
If a trader has an arrangement with a finance
or credit card company to allow you to pay by credit, you
have extra protection. This applies if the goods cost more
than £100.
The credit company is equally liable for
a breach of contract or misrepresentation by the trader.
For example, if the goods are not delivered or are not what
you ordered, or a holiday was wrongly described or you did
not get what you paid for, you may be able to claim from
the credit card or finance company. It is sensible to approach
the trader first. You can, however, make a claim against
the credit card issuer or finance company without going to
the supplier first.
You do not have these rights if you pay
with a debit card (where the money is taken out of your account
immediately) or a charge card (where you must pay all you
owe within a few weeks of receiving the account). This area
of law can be interpreted in a number of ways.
back to top
Are there penalties for settling up early?
You may find that part way through repaying
your loan, you have enough money to pay off the whole amount
owing in one go.
If so, you could be entitled to a rebate
of some of the charges you would have paid over the rest
of the life of the loan. It depends on the type of agreement
you have with the lender.
It can sometimes cost more than you expect
to settle up early. Even so, settling early will cost less
than carrying on with the repayments plus interest for the
full length of the loan.
back to top
How can I get out of debt?
The sooner you face any debt problem, the easier it will
be to solve it.
Don't ignore it and hope it will go away.
If you do, you could end up in court, lose the goods you've
bought or find it difficult to get credit in future. You
might even lose your home. Even if you aren't up to your
neck in debt, it's surprising how quickly it can build up
and how long it takes to pay back.
Work out exactly how much you owe, who you
owe it to and what you can pay back. This will help sort
things out in your mind, and help your creditors to see where
you stand.
Contact the creditor(s) as soon as possible
to explain the problem and try to come to some agreement
about repayments. Your debt won't be written off but you
might be able to pay it back in smaller payments over a longer
period of time. This will probably cost you more in interest
payments in the long term but may be more manageable now.
Follow a five point action plan:
-
How much do you owe? List your debts. Work out when
payments fall. Identify the priority debts.
-
How much do you earn? Work out how much money you have
coming in. Are you claiming all the benefits you are
entitled to? Are you paying too much tax?
-
What do you spend? List your essential and less essential
spending. Compare it with your incomings. What do you
have left over to offer to creditors?
-
Nothing left over? Are there any areas in which you
can cut down your spending? Is there any way in which
you could earn extra money?
- Talk to your creditors. Send them a financial statement
showing your income and outgoings. Explain your offer to
pay off your debt.
What
are administration orders?
They are known as mini-bankruptcies. Under an administration
order the court takes over the administration of the debts
of a person while an agreed regular amount is repaid. Currently,
any debtor with at least one CCJ registered, can make application
to the court for an administration order. If granted, this
provides protection from further action by creditors in respect
of any debts listed under the order.
Creditors not included in the order cannot pursue their
debts separately through the courts – if they try, these
debts are automatically added to the administration order.
A varied administration order is where the amount of debt agreed
under the original administration order is changed, or a new
debt added. A varied order replaces the original administration
order.
back to top
What are County
Court Judgments?
If a creditor can prove to the Court that a debt is owed,
the Court will give judgement to the creditor and the debt
will have to be repaid. The creditor can then ask the court
to recover the debt in various ways, including the use of
an attachment of earnings order and Bailiffs.
If a county court has ordered you to pay, called “having
judgement entered against you”, details of the judgement
will usually be entered on the Register of County Court Judgements.
Most entries stay on the Register for six full years. The
Register is maintained by the Registry Trust, a non-profit
organisation.
CCJs paid within one calendar month can be removed from
the Register. Where the CCJ is paid outside one calendar
month, the CCJ will be marked on the Register as “satisfied” but
will reported for the six years. For a CCJ to be marked as “satisfied”,
you need a certificate of satisfaction from the county court
concerned. You will need to quote the case number to the
court and provide the court with written evidence that the
CCJ has been paid in full. There is a court fee of £10.
CCJ registrations can also be removed if they were entered
in error or paid before the court action. Application must
be made to the court to have the CCJ set aside for which
a court fee of £50 is payable.
You can require the credit reference agencies to include
a “notice of correction” on your credit file in order to
explain the information held. Where the notice relates to
a CCJ, Registry Trust operates an exchange for the credit
reference agencies. You need notify only one and the rest
will be notified automatically.
back to top |
