Even if you have a less than perfect credit record, you should still shop around to find the best deal before signing up.
1. Your Credit Record
Send off for and check your own credit file with the credit agencies before you apply for a mortgage and make sure you supply comprehensive and correct details to them if there are any inaccuracies in your personal record. Bear in mind that it can take weeks or even months to get your credit record changed.
Details of the two major credit reference agencies are below:
Credit File Advice Centre
PO Box 1140
Consumer Help Service
PO Box 8000
2. Your Choices
Shop around – there are a number of lenders active in the sub prime market (including some specialist subsidiaries of big high street lenders). We can do the shopping around for you. Contact us for a no obligation quote. You will be contacted by a specialist sub prime mortgage broker who will discuss the options open to you.
3. Mainstream Options
Don’t forget to check out the high street lenders even if you have had credit problems in the past – your own bank, for example, may be prepared to lend you the mortgage you want if your records has improved recently.
4. Fixed For Safety
Consider taking out a short-term or medium-term fixed rate mortgage that will provide valuable protection should variable interest rates rise. Two and five year fixed rate terms are the most popular. It is also worth considering a capped rate deal.
5. Redemption Penalties
Ask the lender whether there are any early repayment fees or redemption penalties attached to the loan. If so, find out how much they are and how long they apply for.
Look for a loan that offers penalty-free overpayments if you want to pay off your mortgage early. Some lenders allow additional payments but set a maximum of, say, 10 per cent of the mortgage being paid off each year with no penalties.
7. Rate Trade-Off
Remember that the lower the interest rate, the more likely there will be early redemption charges attached to the mortgage.
8. Like With Like
Interest-only mortgages are cheaper than repayment mortgages in terms of the monthly payments to the lender, but you must also take into account (and pay into) a separate investment plan designed to pay off the interest-only loan.
9. Paying For Advice
Find out how much commission (or fee) the broker will get from the lender for arranging you mortgage. It could be, say, up to one per cent of the loan. Don’t forget this is in addition to any fee that the adviser may charge you directly.
10. Annual Review
Reassess your mortgage every year – if you pay your mortgage on time and in full each month, you may be able to remortgage to a cheaper loan with either your existing lender or a new lender.
Contact us for a no obligation mortgage quote.