As the Bank of England announces that getting a mortgage in the next quarter could prove tricky, we decided it might be helpful to look at a few simple ways you can make yourself a more attractive lending proposition to the mortgage lenders out there!

1. Be Responsible…

This also ties in with the next category…lenders like to see that you’ve had some credit in the past and handled it properly, so if you have a loan or credit card, make sure you pay it on time every month – whether you pay the entire amount off or just the minimum. Avoid things like breaching your overdraft or credit card limits, as this makes it look like you’re not in control of your finances, not to mention the fines and penalties you’ll face.

If you rent, make sure to keep up to date with the rent, and if you share with parents or others, try to get some bills in your name so you can demonstrate a good track record.

2. Credit Scoring

If mortgages are going to be tougher due to tightening lending criteria, you need to ensure your credit record is absolutely squeaky clean too. Make a start by checking your credit record with Experian and Equifax, or sign up to a service like checkmyfile.com – which aggregates data from a number of major credit reference agencies.

Check that the information on there is correct – payment histories, accounts opened, financial associations with ex partners and so on. Don’t assume that they will be correct – check and make sure. In fact you should be checking your credit file regularly, as this is also an excellent way of catching identity fraud as well.

3. Stability

Another thing lenders are really keen on – being able to present a stable financial picture. It may sound obvious, but your mortgage will need to be paid each and every month, on the dot, and lenders want some assurance you can do this.

It means not changing jobs too often, or moving house too regularly either. If you are considering a move from employment to self employment, it is worth considering waiting, as with the virtual extinction of self cert mortgages, as a self employed person you’ll be expected to provide several years accounts, which will not be possible if you business is brand new.

4. Deposits

The day of the 100% mortgage is gone and unlikely to be back for some considerable time. The picture here has improved a lot in the last two years, and there are now some 95% loans out there.

The more you can save towards your new home, the better of course…a lower loan in relation to the value of the property (known as loan to value or LTV for short), the better risk you are for the lender, and the better rate you get as a result. So save hard and put as much down as you can manage!

5. Property Types

Lenders definitely like certain property types better than others. For example, tower blocks, concrete construction, and flats with shared balconies can be tricky although definitely not impossible. Also flats with short leases and above shops can also prove tricky.

The best advice in this case is to go straight to tip seven below…!

6. Organise Your Paperwork!

Lenders will want to see, for employed applicants, usually a minimum of three months bank statements and three months payslips, as well as your last P60, plus proof of identity (passport or driving licence) and residency (usually a utility bill).

You can save a lot of time and effort if you have this paperwork ready for the lender when they want it…if it is a joint application, then you will need the papers for both of you.

Lenders will occasionally want more (maybe a mortgage statement or reference from an employer or landlord) but by having this stuff ready, you’ll be ready to cover most bases.

7. Use A Broker

I am sure you expected us to mention this, but you’ll hear other people say this too. Brokers do have access still to deals you can’t get direct, and a broker is also an expert at presenting mortgage cases to lenders in the right way, and providing the right documents quickly and effectively.

This skill alone definitely increases your chances of getting accepted for the loan you want.

So What Do I Do Next?

Well, you can do something about this right now by getting in touch with us – we can guide you through the maze including all the stuff above. You can call on 01702 468009, or 07758 146302, E mail us at rachel@abcmortgageservices.co.uk  or get in touch via Facebook, or Twitter.

However you choose to do it, we really look forward to talking to you soon and helping you out!

As you’ll know if you’re a client of ABC, or if you’ve read any of our newsletters or blogposts, we’re huge advocates of insurance in general, and specifically life insurance. It is just so important to protect your loved ones in the event of your death so they don’t have to deal with the financial fallout of the death of a loved one, as well as the emotional pain.

We’re also now really big on wills and trusts too – you really can’t do without properly planning for the worst case scenario. Sounds grim, but it is so, so important.

So I was shocked (although probably not surprised!) to read that according to a recent survey of 3,000 Britains, millions of people may well be leaving something sizeable for their loved ones if they were to die suddenly – a mortgage debt!

25% Have Got It Right…

Only a quarter of UK adults polled think they have sufficient financial protection and/or savings to clear the mortgage and other debts, and to provide an income for their family and dependent relatives upon their death.

Here’s the real kicker…17% of people surveyed confessed to being worried about the financial impact of their death on their family and dependents.

However, if they had an extra £10 a month to spend, a large majority (65%) would rather play the National Lottery than buy life insurance.

Odds of 14,000,000 to 1…

The survey also revealed the main reasons why people don’t have either enough cover or any cover at all…34% cited the cost, and apathy accounted for a further 25%. A further 9% said they weren’t sure how to get more cover, and 10% believed it was too late for them to get cover at all.

It is certainly true that we don’t like to think about our own mortality, and that can make life insurance a difficult product to consider buying. We’ve even spoken to people who won’t buy based upon the fact that they think it is bad luck, as if they are in some way jinxing themselves by buying a product which will protect their loved ones after their death.

However you need to think about how you’re going to look after your loved ones after you’re gone – if you leave it and something does happen, then it really will be too late.

Life cover at its most basic doesn’t have to be expensive…as a guide what you need is enough cover to pay off outstanding debts, including your mortgage, and providing a lump sum for your dependents.

A Better Place For Your £10 Investment!

The life insurance market is pretty competitive at the moment with numerous companies competing for your business. Certainly most of us will get a decent amount of cover for your £10 per month lottery money. Also, even if you’re a bit older, premiums have come down quite considerably in the last few years, so it is well worth shopping around to see if you can get a better deal.

Also you need to think about reviewing your cover regularly – or simply ask us to review it for you – we’ll do it for nothing.
If your personal circumstances change, you should definitely review it – things like a change of job, buying a new house, getting married or starting a family can all change the need for cover and it is important to keep up to date to make sure you’re properly protected as your situation develops.

That way, if the worst should happen, you’ve always got your dependents protected.

What’s Next?

For your free no obligation insurance review, give us a call now on 01702 468009, or 07758 146302, or E mail us at rachel@abcmortgageservices.co.uk. We’ll be happy to take a look at what cover you have, and offer an independent review and recommendation, tailored just for you.

And why not leave us a comment below, or catch up on Facebook or Twitter?

Yes, we’ve finally done it – we’ve managed to find a part of the mortgage market that is growing, even booming!

The buy to let sector was one of the first sectors to lose support from the mortgage market when the credit crunch began to bite. Thanks in part to the more sensationalist end of the mass media, buy to let landlords began to be pilloried as greedy investors, artificially ramping up property prices and creating a huge housing bubble.

It Makes No Sense!

I for one could never work this out, as all buy to let investors are doing is buying an asset in a market for whatever price that market decides is reasonable, based upon supply and demand.

They then rent this asset to people who perhaps cannot afford to buy the asset for themselves yet, or perhaps only want to rent the asset for a shorter period, due to work commitments for example.

Whilst there are undoubtedly people who abused that market (show me a market where that doesn’t happen!) these were in the massive minority. The buy to let investors we worked with were building a portfolio of investments, no different than buying gold, silver, shares or bonds.

So it is great news to see the market making a strong comeback. Key lenders such as Paragon have come back into the market and are lending again, and others such as Northern Rock and Aldermore are offering increased lending, incentives and improved terms as time goes on.

Results of the NLA Survey

The 65% figure comes from a National Landlords Association (www.landlords.org.uk) study where 65% of landlords rated the prospects for the sector as being “good” or “very good”.

This is in contrast with how landlords feel about the UK economy as a whole, with only 6% rating this positively.
David Salusbury, NLA Chairman, said “After a challenging few years, it is encouraging to hear that the majority of landlords are feeling positive about their lettings business and the overall state of the private-rented sector.
“The increasing availability of Buy-to-let mortgages and strong demand for rental accommodation is further stimulating positive sentiments, with rent arrears appearing to stabilise and void periods decreasing in recent months.

“The private-rented sector is demonstrating its resilience, in marked contrast to some other industries and investments.
“Like other business people, it is clear that landlords are not immune from the effects of financial uncertainty. The fragile state of the economy is a concern for landlords, many of whom have mortgages to pay or rely on their property portfolios to earn a living.

“The cuts to local housing allowance are a further worry for tenants and landlords alike; both should be mindful of how they may be affected and give consideration to how they will deal with the long-term consequences of welfare reform.”

So What’s Next

This is clearly positive news – so if you’re a current buy to let investor and want to look at reviewing your portfolio, or a newbie looking to get into buy to let as an investment – and with interest rates at all time lows and the property market stagnant it is a great time, get in touch with us and lets see what we can do for you.

Also you can check out our buy to let page for more information on the services we offer to landlords, and leave you comments below to let us know what you think!

ABC’s Top Tips To Get A Top Credit Rating!

Prior to 2008, it was certainly possible to get a mortgage even without a good rating, although of course you paid the price in the rate, fees and monthly repayments.

However the sub prime market is now much reduced, and rates very much higher in relation to everything else.

So you need to give yourself the best possible chance, and having a tip top credit rating is a great way to do that.

So here is our free guide to how to have a tip top credit rating!

Credit Rating – How It Works

Mortgage lenders (and finance houses generally) rely heavily nowadays on automated computer systems, which credit score and profile applicants before the underwriting process even starts. If you fail the credit score, it means you can fall at the very first hurdle.

Credit score is a points based system, which is a mixture of your past payment history, how long you’ve lived where you are now, whether you’re on the electoral roll where you live now, and how much credit you have available to you at any one point.

It is therefore really important to know how to build and protect your score to make sure you can get what you need.

Why Can my Credit Score Be Low?

Your credit score can be poor as a result of four main reasons.

1. Not Having Enough History

For example, you’ve not had a credit card or loan before and there is no track record showing you paying it back. People are often confused about this, as they assume that having no debt is a good thing (which it mostly is) however if you’ve got no history at all, that means no track record by which lenders can judge your ability to repay on time.

2. Poor Payment History.

This is where you’ve had credit before and either not paid it back (and ended up with defaults and County Court Judgements as a result) or paid it back late, which shows up as late payments.

As you might imagine, this doesn’t fill lenders with much confidence that you won’t do the same again.

3. Identity Fraud

Someone else without your permission has applied for credit in your name fraudulently, maxed out the credit/spent the money, and then disappeared. This leaves you, the entirely innocent party, with a bad rating.

There is a lot of talk about how common this is nowadays, and there are even insurance products you can buy to protect yourself from ID theft. Check out our tip for this below!

4. Too Many Searches.

Each time you apply for any form of credit, whether it is a credit card, loan, hire purchase or whatever, the lender will perform a search on your credit history.

Each time they do, it slightly reduces your credit score. So logically if you keep applying, your score will keep reducing until you don’t have enough points left to pass for a mortgage.

Also lenders can take a dim view of credit file with a lot of searches, as it can suggest an applicant that is applying everywhere and being declined by other lenders.

What Can I Do To Fix This?

Fortunately there are a lot of simple things you can do to improve your rating.

Not Having Enough History – Get Yourself Some Credit!

Sign up for a credit card, use it carefully each month and make sure you pay on time every time, whether you pay it all off or just the minimum payment. You may think you don’t need a credit card, but this is an excellent way to start building a good track record and a good score.

Also make sure you’re on the Electoral Register (also known as the voters roll) wherever you live – this applies even if you are renting. It is a little know fact this is used by lenders in the scoring process, so make sure you’re on there. It is free to do this and can really help.

Bad Credit History – Get It Fixed!

Once you’ve got a bad history, it is going to take a while to get it fixed. However the steps to fixing a bad history and protecting a good one are pretty much the same.

It is vital you pay on time every time, so make sure everything that can go on direct debit does – that way you can’t forget. If you think you are going to struggle to meet even the minimum payment, talk to the lender, don’t bury your head in the sand.

It is a matter of time until you’re clear again, and the one big tip to remember to avoid a bad credit history is to make sure you can afford the repayments before you start.

ID Fraud – Monitor and Shred!

Make sure you keep your bills secure, particularly things than can be used to help a fraudulent application to secure credit, like credit card and utility bills. When you no longer need them, make sure they are shredded. Don’t tear them up or just bin them intact.

Also sign up for a credit monitoring service like Experian’s Credit Expert or Callcredit. This is a monthly membership that allows you to check your credit file quickly and easily, and if you are going to do this regularly, which you should, then it is cheaper than requesting your file each time.

By doing this you can keep a track on everything, including mistakes made by lenders, which are quick and easy to fix, but can cause problems if left until you need to apply for credit.

Too Many Searches – Plan Ahead!

This is probably the easiest one to fix. When you know you’re going to be applying for a mortgage, don’t apply for credit for a car, flat screen TV, credit card all at one go.Also if you’re applying for a mortgage, talk to your broker first. A good broker will be able to guide you through all the options before applying for a search with your preferred lender for your preferred product.

With a bit of planning and by following our tips above, you can easily avoid the pitfalls and have a tip top credit rating!

What’s Next?

Get in touch with us either via the site, leave us a comment below or catch us on Facebook or Twitter to see how we can help you get the home of your dreams with a mortgage to match!

This weeks post is about my bette noir – the media!

Anyone who knows me (and I include anyone who has read my blogs in the past in that category) will proably have spotted that the media are not my favourite group, and I am about to explain why with an example!

Before the credit crunch bit in 2007/2008, I was probably a bit naive (although I never would have admitted it!) in believing more than I should have from the newspapers, particularly what is known as the “quality press” – now there’s an oxymoron.

Having observed at close hand what has happened since then, and the way it has been reported (and the widening gulf between what is actually happening and what has been reported) just makes life so difficult for people trying to make financial decisions, and also those trying to provide advice.

Like it or not, a lot of what appears on TV is taken as truth, and so called money saving experts (who are usually themselves unqualified journalists) are believed more giving generalistic advice than a specific review by a qualified advisor.

Yesterday there was some news with regards to housing repossessions – the Council of Mortgage Lenders says that repossessions are levelling out (i.e., not increasing) and arrears are stabilising and the evening news bulletins reported they were increasing! So who do you believe?

Remember there are lies, dam lies, and statistics. Here’s some free advice – the TV doesn’t know you, your circumstances or what you need. So turn the set off, put down the paper and look up a local independent broker, make an appointment and find out what is best for YOU.

Here ends the sermon!!!!

We always try to avoid using mortgage industry jargon wherever we can, as we think it is pretty pointless, and unless you’re talking to someone else in the same industry, it just looks like you trying to be clever. However from time to time it is worthwhile bringing one up, even if only to explain it quickly and then explain what it means for us all.

So what is this phrase?Well, it is “protection gap” and as you might have guessed it refers to the gap between what you owe, especially (but not exclusively) on your mortgage, and the amount of insurance protection you have in place in the event that something goes wrong, and you’re unable to keep up payments on the debt.

According to a variety of official sources, this “protection gap” is widening.This means we owe more and more, and we are insuring less and less.

In 2009, the Association of British Insurers (ABI) recorded 636,973 new mortgage related life assurance policies taken out, whilst the Council of Mortgage Lenders recorded 925,000 new mortgage advances. (Source: Defaqto Insight Report, author Ben Heffer)

It is worth remembering that there are circumstances where what counts statistically as a “mortgage advance” may not need a new protection policy, perhaps individual or personal reasons.

However the figures still suggest that there are people taking on debts which their nearest and dearest would struggle to pay off, if the worst did happen. The issue is even more acute when it comes to income protection and income replacement cover, where very little new protection is being sold.With rising unemployment, now is a very important time for customers to be looking at this type of cover, however very few are.It seems to have slipped to the bottom of virtually every customers shopping list.

One of the main reasons for this is cost of premiums, and particularly cost in relation to what you seem to be getting for the money.You will almost certainly have heard someone say (and maybe even thought this yourself) “what am I actually getting for the money?”.Certainly some people do regard insurance as a waste of money. In fact we might even know people who actively seek to claim against a domestic or travel policy for a different item each year, just to make sure they’ve “got their moneys worth”

So what’s the answer?Well, the answer as with most things is not just to get information on the subject, the answer is to get the right information.Find an expert and talk through what you see as your priorities and with their help, match insurance cover that you can afford to meet your most important needs.There is no point in insuring everything to the eyeballs to the tune of £200 per month in premiums when your budget for insurance is £50.All that will happen is that you will have to cancel the cover and then you’re back where you started.

(This is an edited version of this article, specially adapted for the blog. You can read the full article by subscribing to our newsletter at either www.southendremortgage.com or www.abcmortgageservices.co.uk.We look forward to welcoming you to our sites!)

This week the new Chancellor of The Exchequer, George Osborne announced in his annual speech at Mansion House that the Government will follow through on the previous Conservative pledge to abolish the Financial Services Authority, which was set up by the Labour Government in the 1990s to regulate the entire financial services industry, from banking to insurance, home loans and all kinds of financial products (with the exception of unsecured loans under £25,000).

The FSA were responsible for regulating Northern Rock and were widely criticised for not seeing flaws in Northern Rock’s business model (and that of several other lenders which operated the same model but weren’t such high profile) and also not doing more in relation to the onset of the credit crunch, curbing irresponsible trading activities of some banks and finally the collapse of merchant bank Lehman Brothers in late 2008, the fall out from which effectively pushed the economy deeper into the jaws of the credit crunch.

Mr Osborne’s speech was revealing, both for what he said and also what he didn’t say. He was very clear that the responsibility for regulating banks and banking activities will go to the Bank of England (as Bank Governor Mervyn King put it “…I will be there to turn the music down if the dancing gets too wild”) however what he didn’t say was anything about the Bank of England limiting percentages of loans that can be offered.

Previously there was a rumour that when the Bank assumed responsibility for mortgages, they would consider limiting the maximum loan that banks could offer would be 75% of the value of the property.

However George Osborne left this out of his speech, which leads me to believe that whilst this might be something that is discussed, it is unlikely to happen anytime soon.

And there is a very good reason for that.

The country is massively in debt and cuts to services and increases in taxes are on the way. The Government makes massive income from the property market, in stamp duty and VAT, as well as capital gains taxes from the sales of buy to let properties.

The housing market has survived fairly well, and prices are close to their pre credit crunch peaks now.  This is due mainly to a shortage of property for sale and the lowest interest rates ever.

The Government needs all the income it can get at this point, and the last thing that they will want to do is kill the goose that laid the golden egg.  Whilst they want to be seen to be tough on the excess that led to credit crunch, equally they want to support the property market and keep first time buyers and movers alike queuing to pay their taxes.

Keep coming back for the inside track on this and I promise will keep doing my best to explain what these mean to you and I and our bank balances ! 

There has been a huge amount of media comment recently concerning the Government’s annual Comprehensive Spending Review.I thought we’d add to the noise with our spin on it!

This has assumed much greater significance this year due to the fact that it is the first review that the coalition Government has undertaken since being elected earlier this year.It is also of note that the coalition made it clear early on that it would be imposing swingeing cuts on virtually very aspect of the budget in an attempt to reduce Britain enormous budget deficit (which is currently running at a whopping £160bn a year – yes £160 Billion!).

UK Government debt currently stands at £823bn and is expected to peak at around £1.2tr before reducing – the coalition claim this is lower than the peak expected had the Labour Government been re-elected and carried out their proposed spending plans.

Just like when we spend too much on credit cards or get too far into debt, eventually the music has to stop and we have to cut back.The Government is no different, just the numbers are far bigger!

The CSR on Wednesday revealed cuts over the next four years of £83bn, which will affect virtually every aspect of the budget, from the armed services, to benefits and social services, education and the dramatic cutting back of so called quangos, committees set up under the Labour Government to discuss different ideas, often with little tangible results, other than a lot of expense. Here for ease are the key points of the review:

• About 490,000 public sector jobs likely to be lost
• Average 19% four-year cut in departmental budgets
• Structural deficit to be eliminated by 2015
• £7bn in additional welfare budget cuts
• Police funding cut by 4% a year
• Retirement age to rise from 65 to 66 by 2020
• English schools budget protected; £2bn extra for social care
• NHS budget in England to rise every year until 2015
• Regulated rail fares to rise 3% above inflation
• Bank levy to be made permanent

(Source – BBC News website – 20.10.10)

So we’ll work longer and if you are a public sector worker, you’ll be pretty concerned about what the future holds for you.

The impact on the mortgage market will take some time to shake out – there has been a lot of comment about what happens next.What is becoming apparent is that the fallout from the crisis of 2008 and 2009 is going to take some time to be sorted out.

As far as property and mortgages are concerned the best thing to do is to talk to an expert – whether you are thinking of moving (there are definitely bargains to be had out there) or remortgaging.We’ve been saying for a while that anyone on their lenders standard variable rate ought to be thinking about what is available for them – if you can fix at a good rate for a period of time now, it is seriously worth thinking about.A major lender this week launched a re-mortgage product that enables you to start with a tracker and drop into a fixed rate if you want in the future, so there are good products out there!

Whichever way you look at it, we’re in for a tough time as we work our way out of the doldrums – but that doesn’t mean there aren’t good things out there for you.

The next blog post will be more cheerful, I promise!

The annual budget was presented recently George Osborne, Chancellor Of The Exchequer.

As usual you saw George outside Number 11 brandishing the famous red briefcase, and you might have also read some stuff in the papers about what was covered in the budget.

There was still a heavy emphasis on recovery from the recession, which was inevitable seeing as we’re paying back the debt that was run up during the previous Governments attempts to avoid financial meltdown in 2009.

So What Was In The Budget For Housing?

In actual fact, not a huge amount really!

There was lots about tax, inflation, oil prices, you name it.

There was even reference to the fact that our tax rules are now the longest in the world, having recently overtaken India.

First Buy For First Timers…

For housing, there was a scheme which will help only 10,000 first time buyers in the entire country.

The basic facts on this “First Buy” scheme are that 10,000 first time buyers will be given help from the Government, in cooperation with the construction industry.

The other side to this is that it is intended to kickstart the construction industry and provide more jobs here too.

How Does It Breakdown?

The borrowers put in a 5% deposit, with the Government providing a maximum of a further 15%, leaving the borrowers themselves to fund the rest through a mortgage for the balance.

The unfortunate fact is that this is limited to only 10,000 buyers and will also only apply to new build properties, hence the involvement of the construction industry in the scheme.

It is a shared equity scheme, where the government will retain a share in the property.Although details are still to be confirmed, so watch this space!

How Is It Going To Be Funded?

Basically £250m is coming from the bank levy, an additional tax made again the banks, so perhaps they’re not all bad then!

As always, drop us a line here or call us and we can explain not only the First Start scheme, but all of the other ways a broker can really help you!

I read an article in the past week in the mortgage trade press (usually a lot of mortgage brokers complaining to each other about how bad the market has been in the last couple of years!) which has what I think is a good message for both brokers and also the general public, specifically those currently renting their home.

The message to brokers was that in these times where typical mortgage business is difficult to come by, brokers need to be able to diversify beyond straightforward re-mortgage and purchase mortgages. The tag “straightforward” might be a bit of a misnomer these days with the lenders criteria becoming tighter and tighter week by week, but it is still a logical way to describe a mortgage brokers’ standard fare.

The cry to diversify for brokers almost always is based around the capacity to offer more insurance products, or offer those products in a more effective and widespread manner.

The term used by John Malone of PMS (one of the large mortgage “clubs”) was that there will be a “seismic shift” in the mortgage market in the coming years as more buyers come to estate agents and mortgage advisers seeking mortgages and are refused by the lenders.

Whilst this might seem a bit dramatic, it does point to the fact that the private rented sector may grow in the coming years, and that growth could be sped up if an increasing number are declined for finance and therefore are forced to rent.

Which leads me to the point here – what happens to those people in rented accommodation when it comes to insurance?I am talking here about insurance above and beyond just contents insurance to protect possessions, and referring more to life assurance, critical illness and payment or income protection.

Although around 60% of people taking out a mortgage go to a broker, who can also assist with insurance in many cases, very few people looking to rent seek the advice of an independent insurance broker when it comes to protection needs.The trick is how brokers can reach out to those people clearly needing advice and who may not even really realise it.

If you are planning to rent longer term, i.e., if you don’t know for sure when you’ll be buying, then income protection is an essential consideration – otherwise how are you going to manage to pay the rent if you lose your job?Also anyone with a family absolutely must have life insurance to protect their family in the event of their death. Although there is no mortgage to pay off, a lump sum or regular income provided in the event of death during the policy will mean the rent can continue to be paid and a roof kept over your family’s head.

With benefits being cut back and the Government urging everyone to roll up their sleeves and help work the economy back into shape, there will be less and less help from the state, meaning it is up to you to look after your family and not leave it to chance.

Contact us now via the site or on 01702 468009 – we offer a great range of well priced insurances to cover every eventuality.