It’s true that since the credit crunch hit last summer, the availability of mortgages has been in steady decline. It’s not that the money for mortgages has “dried up” – it’s that the large banks and financial institutions have decided they are overexposed to sub-prime mortgage lending, both here and abroad. Because these banks don’t want to lose anymore money than they already have (some banks still don’t know how much they have really lost) they are sitting on the cash they have (or investing it elsewhere) until they feel that they are safe to re-enter the mortgage market with renewed enthusiasm. And rest assured, they will re-enter the market.
So this means that until the banks do decide to reinvest seriously in the mortgage market, they only want very low-risk mortgage business. This is ultimately for the protection of the banks shareholders. For a bank, “low-risk” mortgage business would be those mortgages given to individuals with a very clean credit history, who have a large deposit for a purchase (or a large chunk of equity for a remortgage).
Sounds good, but what if you don’t fit into the “great credit profile, tons of equity/cash” box?
Well, there are still lenders operating in the higher-risk markets (such as self-certification, bad credit or high loan-to-value mortgages). But because there are fewer lenders interested in these mortgage products, the money has become more expensive – in terms of both interest rates and fees.
There is still money out there to be lent to almost any profile of borrower. However, there has never been a more important time to ensure you seek the advice of a qualified, professional mortgage adviser with access to the whole mortgage market so you can ensure you are getting the best possible mortgage deal.
The above information is provided for information only and does not constitute mortgage advice. Your-Mortgage-Advice.com recommends the use of a qualified, professional mortgage adviser with access to the whole mortgage market, who is regulated by the Financial Services Authority (FSA).
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Filed under: Bad credit, First time buyers, Mortgages, Remortgages & Moving, Self-cert
