Getting a Mortgage: Not Much Has Changed Over The Years

Getting a Mortgage: Not Much Has Changed Over The Years

In the financial world, or sector as some say, much has changed over the years, but in as much as things change, they stay the same. The basics of banking, lending money, charging interest, and unfortunately collecting unpaid loans is the same.

The same can be said of buying a house and getting on the property ladder. The basics are the same, of course the prices have gone up as property in some areas has skyrocketed in price.

Getting on the property ladder may still be the dream for many people, but one aspect of reaching for that first rung, and subsequent rungs is the fact we need a mortgage to grasp it. Not many of us have the cash to by a house, so we need to go to Mr. Banker and borrow the money in the form of a loan, a loan called a mortgage.

Getting approved for a mortgage may seem like a long process and stressful, but it doesn’t have to be that way.

More of the Same Only Quicker

The changes in getting a mortgage today from say 25 years ago are subtle and not very different. It really is the same process it was years ago, only sped up today.

The bank or mortgage company needs to verify your details and certain information, you may need a deposit, the size of which can vary according to the type of loan you are to receive and the sale price of the house, and that is pretty much it.

The way the process has changed is the time that it may take to do all this.

Many years ago it could take weeks to get approved for a mortgage. The lender had to get documents verifying your employment from your employer, they required bank statements, a valuation on the property, and of course a credit history.

Then along came credit scoring, and that aided in speeding up the process, and also dictating what interest rate a borrower may receive. Also the use of computers, and the networks of credit bureaus so that our information and details can be accessed immediately.

Credit scoring gave lenders a quick look as to if a borrower was a good risk or not. A high credit score is good, a low credit score not so good.

A high credit score can mean a lower interest rate, a low credit score can mean a high or higher interest rate.

But having a low credit score or bad credit dos not always mean you cannot get a mortgage or a loan.

Bad Credit and Bad Credit Loans

Having a low credit score or bad credit can be a hindrance in getting approved for a mortgage, and for any loan.

However there are loans for people with bad credit, or bad credit loans, and there are things one can do to improve their credit scores.

* Review your credit report for any errors or omissions and have these corrected.

* Get on the electoral role.

* Pay your accounts on time.

* Do not take out a lot of credit.

* Do not apply for a lot of credit.

* Have a pattern of saving money.

One of the best ways to insure you get approved for a mortgage if you have bad credit, can also be one of the more difficult things to do, have a large deposit.

The larger your deposit on a property, the better your chances are of being approved for a mortgage. Of course saving up a large deposit can prove difficult.

Length of a Mortgage

One reason why underwriting or the process of getting approved for a mortgage is as detailed as it can be, is due to the length of the loan. In some instances a mortgage is going to be 10 years, or even 20 years, and in some instances 30 years!

A lender needs to take your details as a snapshot of you now, and project it ahead for many years to see how you may pay.

The reasons a mortgage may be rejected can be varied, but usually fall into a few categories:

* Affordability, being able to afford the mortgage payment each month.

* Credit history or having weak, or poor credit.

* No or too low a deposit.

* Employment, not having a job, which ties in with affordability.

Many of us want our mortgages to be as short as possible, in part to not be in debt, but also as we get older we want our homes paid for before we retire.

In today’s world, that may not always be possible. If we buy a property and take out a mortgage later in life, we may be still paying it off as we reach retirement age, or we need the longer term loan of 30 years to afford the property.

The longer the term of a loan the lower the monthly payments can be.

There are even reverse mortgages now. These mortgages are loans a home owner borrows against their property to pay them a monthly income based on the equity of the property. When the home owner dies, the bank or lender then can take the property back.

Naturally there are many guidelines and restrictions on this type of loan/mortgage.

Some banks are testing and offering “mortgages for life”.

This form of mortgage lending has the borrower paying payments until they die, or go into care. It allows the borrower to pay only the interest on the loan, which prior had the borrower forced to sell the property later in time to pay off the loan completely at a set date or time.

This longer form of a mortgage allows the borrower additional time to pay the interest on the loan, and they can live in the property without the need of selling it.

More and more lenders are looking into this form of mortgage lending.

The Sales Director of OneSavings Bank, John Eastgate said,We would absolutely look at considering this type of loan borrowers.”

“Lending into retirement has been a major issue for the past couple of years, so now the Financial Conduct Authority has come out with this proposal I think it will open the gates to allow lenders to begin to offer these mortgages.”

“And I don’t think it will be small lenders wanting to offer them; major lenders will want to offer them as well.”

Mortgages4Life, Simon Little said, “The way we see it, most people in retirement now have pensions that are guaranteed for the rest of their lives. That makes them a safer person to lend to than someone in work who could lose their job at any moment. This is good news for borrowers.”

Just another way to allow borrowers to be able to afford a property and mortgage, and stay in the property for life.

So as things change they stay the same. Mortgage lending is basically the same as it was, only things have been sped up a bit to make the process more streamlined and quicker.

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<strong>What is Our Criteria For Applying?</strong> 
Every lender on our website has their own specific criteria by the basics are mentioned below and you must have a guarantor to be eligible. Simply select the lender of your choice and you will be taken directly to their website where you can apply. You will be required to submit your details including:<li style=”text-align: center;” data-mce-style=”text-align: center;”>Name (must be over 18 as the borrow, 21 or 25 as the guarantor)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Residence (your chances will improve if your guarantor is a homeowner)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Employment status (must be employed or on a pension)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Income (earning at least £600 per month and able to make repayments)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Monthly expenses (not have too many loans open or in major debt)</li>
You will then be asked to include the details of your guarantor and as mentioned above, this is usually someone who you know and trust and wants to help you with your personal finances. Ideally, a guarantor with good credit will maximise your chances of being approved based on the idea of ‘if someone with good credit trusts you, well we can too.'<strong>How Much Can I Borrow From Guarantor Loans?</strong>Guarantor Loans gives applicants the chance to borrow £500 to £15,000 depending on the lender. Some lenders we feature like Buddy Loans only have a maximum loan value of £7,500 and TFS Loans is the only lender that stretches up to £15,000.Factors that can influence the amount you can borrow revolve around having a good guarantor. One that is a homeowner, with solid employment, income and good credit rating will maximise your chances of borrowing the largest drawdown possible.The lenders featured on Guarantor Loans see a homeowner as someone who has already gone through the rigorous process of credit checking and affordability and if they can afford a house, they should be able to act as a guarantor for you.By comparison, having a guarantor that is not a homeowner offers slightly less security and means that amount you can borrow is slightly less too.Higher amounts may be available to those who already have a better than average credit rating, are homeowners themselves and a repeat customer with the lender who has already paid their loan on time. To apply directly with your lender of choice see <a href=”” data-mce-href=””>direct lenders</a>.<strong>What Does The Guarantor Have To Do?</strong>Upon completing an application, the lender will typically send you a <a href=”” data-mce-href=””>pre-contract loan agreement</a> and SECCI (Standard European Consumer Credit Information form) which will highlight the terms of your loan. You and your guarantor will be required to review the terms of the loan, including the loan drawdown, fees, repayment dates and responsibilities – and this can be signed via an online verification process using your email and mobile phone.The lender will usually carry out an individual phone call with you and your guarantor to ensure that you both understand the responsibilities and what is required of you – notably that if you cannot make repayment, your guarantor will be required to pay on your behalf. Further to some additional credit and affordability checks, funds can typically be transferred within 24 to 48 hours (or sometimes on the same day).<strong>Are Guarantor Loans Available For Bad Credit Customers?</strong>Yes, even if you have a history of adverse credit, <a href=”” data-mce-href=””>CCJs</a>, bankruptcy or IVAs several years ago, you can still be eligible. The idea is that you are using your guarantor and their financial history to ‘back you up’ and give your loan extra security. However, it is noted that your guarantor should have a good credit score and consent to co-signing your loan agreement.<strong>How Soon Can I Receive Funds?</strong>Guarantor Loans works with lenders that can facilitate funds within 24 to 48 hours of approval, or sometimes on the same day.When your funds are successfully transferred, most lenders working with Guarantor Loans will send the full amount to the guarantor’s debit account first. This is a standard security measure carried out by lenders to ensure that the funds are going to the right person and confirms the involvement of the guarantor. The guarantor usually has a ‘two week cooling off period’ where they can decide to pass on the money to the main borrower or they can change their mind and return the funds with no extra charges.