Habito Launches Free Mortgage Advice For Bad Credit – Which One? news

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Online mortgage broker Habito has partnered with bad credit advisor Impact Specialist Finance to offer free mortgage advice to people with a history of negative credit.

Habito says the new partnership will provide specialized mortgage assistance to people with serious credit problems, such as: CCJs, Mortgage Defaults and Missed Payments.

Here we explain how a broker can help you get a mortgage if you have had financial problems and advice on how to play the waiting game for better business.

Habito launches partnership for bad credit mortgages

Habito and Impact’s new partnership could provide a welcome boost to mortgage applicants with poor credit ratings as they can seek advice without paying Impact’s standard £ 574 fee.

Habito says the link is particularly intended for people who have experienced “serious credit problems” such as Mortgage defaults or late payments.

This is also a big step in the mortgage advice market.

Until now Habito and others ‘Robo’ or online mortgage advisor like trussle have mainly been on Rescheduling and for rent and leaves more complicated areas like bad credit mortgages to traditional mortgage brokers.

Why Do You Need A Broker For A Bad Credit Mortgage?

There are two main reasons to use a mortgage broker when you have had credit problems.

1. Inside knowledge of bad loan mortgages

First, just going through the mortgage application process can be frustrating and ultimately fruitless.

Some of the largest lenders have automated underwriting systems, which can give a “computer says no” response to borrowers with less fortunate financial circumstances when they do apply for a home loan.

A broker has expertise in which lenders consider applicants with various forms of bad credit, which saves time and prevents pointless applications that could further degrade your creditworthiness.

2. Offers that are only available to brokers

The main attraction of hiring a broker is that the vast majority of deals for people with poor credit ratings are not available directly from lenders.

Data from Moneyfacts shows that more than half of bad credit deals are only available through brokers, a number that climbs to 81% for products accepted by claimants with a bankruptcy history.

This means that borrowers who go it alone with their application may limit themselves to a small portion of the market.

Directly from the lender only Directly or through a broker Brokers only
CCJs fifteen% fifteen% 70%
Default 23% 19% 58%
bankruptcy 0% 19% 81%

Finding the Right Broker for a Bad Credit Mortgage

However, this does not mean that you should call the first broker in the phone book because not all advisers have access to every mortgage deal in the market.

Some banks only offer their loans through “selected” intermediaries, which means that they have a group of brokers who have exclusive access to their products.

For this reason, it is important that you do your research and find a broker who offers a service that is truly in line with the market.

How Hard is it to Get a Bad Credit Mortgage?

An adverse credit history doesn’t have to stop your mortgage application.

Your chances of getting a home loan depend on how severe your credit problems are or have been, how long ago it was from the events that led to your bad credit, and how much money you saved on a deposit.

The good news for borrowers is that the number of deals available is increasing month by month, as shown in the graph below.

Take out a mortgage with a CCJ

A county court judgment (CCJ) is issued if you fail to pay the money you owe and the lender has exhausted their options in an attempt to collect the debt.

According to Moneyfacts, there are 1,621 products available for people who have had CCJs.

If you’ve been laid off from your CCJ for at least three years, you can access very competitive mortgage rates without taking a large down payment, as shown below.

Kind of Store Mortgage lending value Lender Initial course Response rate fees
Two year fix 75% accordance 1.35% 4.25% £ 995

Borrowers with ongoing or recently discharged CCJs will need a higher deposit of up to 30-40% to avoid paying a much higher interest rate.

Get a mortgage with an IVA

An Individual Voluntary Agreement (IVA) is a contract that is made between a debtor and their lender to avert bankruptcy.

About 507 offers are currently available to people who have had an IVA, and the best rates are also available to those who have been laid off the longest.

The cheapest rate is offered by the Skipton Building Society for five years and is only available if you have been discharged from an IVA for at least four years and have a 40% or more down payment.

Kind of Store Mortgage lending value Lender Initial course Response rate fees
Five year fix 60% Skipton BS 1.46% 4.99% € 1,495

Take out a mortgage after bankruptcy

Bankruptcy is the last resort and you must have been laid off for a long time and have a large down payment before you can take out a mortgage.

There are currently 720 products for liquidators, but the rules are strict.

If you’ve been exempt from bankruptcy for four years, you can get the aforementioned 1.46% deal from the Skipton Building Society, although you will need a 40% deposit here as well.

Borrowers laid off for six years can get a slightly cheaper interest rate of 1.44% from the Yorkshire Building Society with a 35% down payment.

How to convince lenders to take out a mortgage

  • Improve Your Credit Before Applying: Repair your credit score may take a while, but simple steps like making sure you’re on the electoral roll can increase your score, along with longer-term factors like not missing any payments in a few years.
  • Be open about your circumstances: Honesty about financial problems you have had and what you have done to correct them will help brokers and lenders better understand your situation.
  • Make sure you’ve settled in: Lenders value security. So if you’ve recently started a job, wait until you’ve finished a trial period before applying.
  • Accept that you will need a larger deposit: Even if you have no more credit problems now, you likely need a 25% or more down payment to get a good mortgage rate – and the more you save, the less risky you will appear to lenders.
  • Do not submit multiple applications: Applying for a mortgage will leave its mark on your credit report, and multiple applications in a short amount of time can lower your score.

Find out more by reading our guides to Bad Credit Mortgages:

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