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How a Debt Management Plan Can Benefit You and Your Mortgage in Grimsby

Debt Management & Mortgage Advice in Grimsby

A Debt Management Plan (DMP) is a formal agreement between you and your creditors to help you pay off your debt. To create your plan, you will need to declare how much debt you’re in and how long you’ve been in debt. This will allow your creditor to get an idea of what situation you are in and how severe it is.

You will then need to supply some financial documents so that they can back up your income and take a look at your expenditures. This will help them to take a closer look at your spending habits and see whether you can cut back on anything.

The next step is to issue you with a DMP that is tailored to you and your financial situation. Once you start your DMP, you will begin receiving monthly payments at a reduced and more affordable rate in order to pay off your accumulated debt over time.

Throughout this article, we are going to look at how a DMP can benefit you and your mortgage in Grimsby.

Improving your credit

A DMP could help you build back up your credit. If you have a poor credit score at the time of starting your DMP, meeting your new monthly payments and slowly paying off your debt can have a gradual positive effect. If you think of it as that you’re clearing debt from your name and are meeting recurring payments each month, you can see why it can help you a little bit.

A higher credit score could potentially open you up to slightly better mortgage products. On the other hand, you will still need to put down a higher deposit as you’re on a DMP and lenders may see you as a potential risk.

Avoiding defaults

If you come up with a DMP before receiving a default or a CCJ, you may be able to avoid them if you act quick enough and accumulate what you owe into a DMP. Once you are issued with a default or a CCJ, it won’t be cleared from your file for 6 years, regardless of whether you’ve paid off the debt or not.

Having a default that is in your name can have an adverse effect on your credit score. As a Mortgage Broker in Grimsby, we would highly recommend avoiding a default if it is possible.

If you speak with a Specialist Mortgage Advisor in Grimsby, they may be able to point you in the right direction to get your DMP together. When lenders see a default or a CCJ on your file, they will question it straight away and may not lend to you because of it.

If you’ve got a default, you may be able to incorporate the amount owed into your DMP. Remember, this doesn’t mean that the default will go away, it will still appear on your credit file.

Reorganise your finances

A DMP can help you sort your finances and could get you back on track to where you need to be. It’s always recommended that you take a look at your finances during the build-up to your mortgage application anyway; reorganising a couple of things here and there could massively benefit you in some cases.

For example, in this situation, you could cut back on gambling to make sure that you’re portraying yourself as a reliable and responsible applicant. If you’re on a DMP and are spending large sums of money gambling, it will negatively affect your chances of getting a mortgage.

Debt Consolidation Mortgage Advice in Grimsby

In other scenarios, we’ve seen some applicants incorporate some of their owed debt into their mortgage through debt consolidation. Your overall mortgage amount will increase, but you’ll be ensuring that your unsecured debt becomes secured against an asset.

Debt consolidation is a very specialist subject, and you may require a Mortgage Advisor in Grimsby to help you through the process. We always recommend that you seek advice before consolidating your debt into your mortgage.

Book your own free mortgage appointment online today. Use our Get Started process and choose a date and time that best suits you.

Mortgage Payment Holidays

Mortgage payment holiday advice

As you may have heard, the government have now promised borrowers that they will be able to receive a three-month mortgage payment holiday if they need it. However, some lenders could also be financially unstable and may not follow these rules, even though they should.

In the last few weeks, we have been thinking very carefully about how the coronavirus could impact the mortgage industry. We have been in close contact with all of our lenders so that if anything dramatically changes, we can report back to you straight away. We want you to feel secure and comfortable during these next few months of your mortgage payments so we will ensure that we let you know all of the important information.

On that note, we feel that now is a good time to discuss what mortgage holiday payments are and how they can help you with your mortgage payments.

What is a mortgage payment holiday?

A mortgage payment holiday is simply a set-period, agreed upon between you and your lender, bank or building society, where your mortgage payments are deferred. In this situation, the period should be about three months long.

You will still have to pay back these payments. Over the period, you will receive interest which will be added onto your loan at the end of the payment holiday whilst your capital balance will not decrease. So, your overall mortgage loan will slightly increase. So you save money in the short term but in the long term, it may prove expensive.

Once you feel like you are ready to start paying back your monthly mortgage payments, either your monthly mortgage payments will be recalculated at a higher level or your mortgage term could be increased. Lenders prefer to not increase your mortgage term as it could put you past their standard retirement ages.

You may even be allowed to pay off a lump sum later on in the year to get your monthly mortgage payments back on track to how they were prior to your payment holiday.

Mortgage payment holidays are available for borrowers with both residential or Buy to Let mortgages. This really helps out landlords as they now have help if rental payments are affected.

The government’s proposal

Here is the Government’s proposal following the COVID-19 outbreak:

How do I apply for a mortgage payment holiday

Even if you had a mortgage payment holiday before, we always recommend speaking to your Mortgage Advisor in Grimsby. They will sort out everything out for you and work out whether you actually need to take a mortgage payment holiday. Alternatively, you can go directly to your mortgage lender and enquire about taking one but this may not benefit you as you may not even need one. The main thing is not to panic and explore all of your options before rushing into anything.

Here are the steps you need to take if you won’t meet/aren’t meeting your monthly mortgage payments and have been directly affected by the COVID-19 outbreak:

Will a Mortgage Payment Holiday impact my credit score?

In most cases yes, they will have a negative impact on your credit score. However, you are taking one because of a virus so lenders shouldn’t allow it to affect your score.

To ensure that this is the case, before taking out a mortgage payment holiday, you must contact them. You need to record their answer as well as the date, time and the name of the person that you spoke with. This will avoid any confusion down the line if anything changes. It all depends on your lender, there is no guarantee that every lender will say the same thing.

Will I still be able to remortgage or take a product transfer with my lender?

You would’ve thought that everything would continue as normal, however, all lenders are now avoiding all remortgages and product transfers during a mortgage payment holiday.

This will affect borrowers approaching the end of their existing product as they may be forced to move on to a higher lenders variable rate. This could mean that borrowers who act too early and jump into a mortgage payment holiday deal straight away could end up accruing interest on a costly variable rate.

This is another reason why we say don’t rush into anything! Take it slow and evaluate your options with an expert Mortgage Advisor in Grimsby first, they will make sure that you actually need to take out a payment holiday first before diving in headfirst. There are lots of mortgage options out there so have a look first with your local Mortgage Broker in Grimsby.

What are my other options?

Some lenders could offer you a temporary switch over to interest-only in order to reduce your monthly payments but not to add any more to the loan amount by still servicing the interest payments each month.

You don’t need to put all of your mortgages onto interest-only, but doing so could help you out financially.

If you have savings, remortgaging onto an offset basis could really help you out, you will be cutting down on monthly payments massively. For example, if you have a £350,000 loan and £100,000 in your savings, you would only pay interest on £250,000.

This may all may seem a bit crazy and it may have come around faster than expected, however, you should try to take it slow and calm down. As your local Mortgage Broker in Grimsby, we are here to help and relieve you of all of the stress. Remember, we are still open as usual operating 7 days a week. Receive a free mortgage consultation with a Mortgage Advisor in Grimsby today, we hope that we can help you out!

Mortgage Advice in Grimsby

Agreement in Principle & Soft Credit Searches

https://www.youtube.com/watch?v=HpYnX0xSL_o
What is an Agreement in Principle?

AIP and Credit Search Mortgage Advice in Grimsby

When you pass the lenders credit score to qualify for a mortgage, you will be given an agreement in principle or an AIP for short. By having an AIP in place allows you to make an offer on a property. It’s also quite handy for asking price negotiations, as the seller now know that you are serious and ready to start.

https://www.youtube.com/watch?v=G_9hRtzcOlo&t=1s

How does your AIP affect your Credit Score?

This independently relies on the type of search the lender decides to take. These include both soft and hard credit searches:

Soft Credit Searches:

It is now more common for lenders to carry out soft credit searches than it was in the past. This is because they need less information out of it and can leave your credit score Unaffected. Whilst the financial institution doing a soft search obtains less information about you than if they had done a hard search, an agreement in principle from one of these lenders is usually still an extremely strong signal that your full application will be accepted.

Hard Credit Searches

Hard Credit Searches go more in-depth than Soft Searches. The main difference between Hard and Soft searches is that Hard Searches can affect your Credit Score. Anyone who looks at your file in the future will be able to see that you have had a Hard Search on your Score. This won’t really affect you if your Credit Score is high. If your score is lower and you have more than one Hard Search on your file, it could look like you are trying to apply for lots of credit at the same time.

Does an AIP Guarantee a Mortgage in Grimsby?

You will never be guaranteed a mortgage, but an AIP will certainly help. Once you provide the lender with all your documents, an Underwriter will make a final decision. Agreements in principle usually include small print that can easily be missed. When customers reach out for help about their agreement in principle, in some cases we find they’ve been turned away at full mortgage application stage.

The documents required include ID, Payslips, Bank Statements, etc. As your expert Mortgage Broker in Grimsby, we take pride in helping you get all of this ready.

Is My AIP a Necessity When Making an Offer?

You can get away with it, however, most estate agents will want you to provide evidence that you are able to proceed with the purchase.

How Long Will My AIP Last For?

Usually, your AIP needs renewing after around 30-90 days. As an experienced Mortgage Broker in Grimsby, we still recommend getting one early so that you can avoid finding your dream home only to be told a Mortgage isn’t available for you. You don’t always need to buy the first house you see after you get your AIP. It’s a simple process, so don’t worry if it expires, you can get another one quite easily.

You may be a First Time Buyer or you might be thinking of Moving Home and are seeking Mortgage Advice in Grimsby. If so, we think that you may benefit from our Mortgage Advice Services in Grimsby. We offer a free initial mortgage consultation with one of our amazing Mortgage Advisors so feel free to get in touch today!

Right To Buy Mortgage Advice in Grimsby

You may be entitled to be put onto the Right to Buy scheme If you have been residing in a council-owned property for an extensive period of time. The scheme enables you to buy the property at a discounted price and that is classed as your deposit. Thus allowing you to use your money on remaining fees.

If you wish to borrow money for home improvements for the property, you may be permitted by some lenders to do this, but you will need to gain permission from the local authority.

What is the Right to Buy scheme?

The Right to Buy scheme was very popular back in the 80’s and deemed helpful by many who used it but also appeared to be a controversial issue in regard to politics. One of the main reasons as to whether the Right to Buy should be active is that the scheme takes homes out of the public sector which doesn’t necessarily help when there is already a housing shortage. This has changed the dynamics of the council estates as more properties have become more privately owned. It would appear that current homeowners who are older were able to get onto the property ladder via Right to Buy.

In order to enrol for a Right to Buy Mortgage, you need to see if you’re eligible to purchase the property. You’ll need a RTB1 which will be the starting application form – from here your local authority will send out a person to figure out how much your property is worth and you will be told the value. After you have received a value figure, you will then be informed of the percentage discount which you’re entitled to and offer you the opportunity to proceed with the process.

You will have to complete a form that the local authority send to you should you wish to go forward with your application.

The procedure of calculating how much you’re able to borrow is the same as any other mortgage and is based on your income and expenditure, so even with a Right to Buy scheme it is still as important to think ahead. Another vital factor is to check your credit score.

What fees are included?

As mentioned earlier, you will have to pay certain fees. These can include:

· Lender’s valuation fee (some Lenders do this for free, proving helpful to save on finances)

· Lender arrangement fee (Sometimes this isn’t necessary)

· Mortgage Broker’s Fee (An experienced Advisor will be able to support you through the process)

· Solicitor’s costs

The Right to Buy was set up on the premise of helping individuals getting on to the property ladder. Therefore, tenants are not permitted to sell a property for a certain period of time to prove they are using the scheme for the right incentive. If the property is sold within that period, a penalty will be issued. This will be expressed by repaying part of the original discount that was granted to you originally.

Some people refrain from applying for a Right to Buy because of certain responsibilities that are attached with owning a home. Certain factors include carrying out their own repairs and maintenance that entails.  On the other hand, those that do wish to take up the offer of the discounts will be able to utilise the scheme to help them become Homeowners, whereas in alternative routes they may have trouble doing so.

33% of Mortgage Applications Are Ruled Out By Lenders

Mortgage Advice in Grimsby

Due to mismatches in criteria, 33% of all mortgage applications may not go through, as recent research by Experian shows. This highlights the significance of using a Mortgage Broker in Grimsby at the start of finding a suitable mortgage to help First Time Buyers get it right when looking for their perfect home.

Experian also points out that only 3.5% of people looking for a dependable mortgage were eligible for the available deals on the market. This means that just because a cheap deal becomes prominent online, it’s far from certain that you will be accepted.

According to Experian, 22% of applicants start off trying to find a mortgage on price comparison websites. There is nothing wrong with using these sites but remember they won’t always match you with all the underlying specific details that come with the Lender’s criteria.

Mortgage Advisor in Grimsby

Dependant on the lender, there is still a possible chance of not being accepted at any time throughout the duration of the Mortgage application – this can cost you the house if it takes too long. This highlights the importance of how a Mortgage Broker in Grimsby can help get you to where you need to be more securely and in a faster amount of time.

The researched also showed that 27% were eligible for a mortgage but only for a reduced amount on the basis that it meets the lender’s affordability requirements. Again, this occurs quite often within the market.

A lender will state how a person may borrow certain amounts, but sometime later there can be certain reasons which are found which allows the lender to rearrange the finances involved with the mortgage. It’s apparent that there are vast differences in the amount one lender will lend you in contrast to all others within the same area.

The amount of stress involved with applying for a mortgage can easily be reduced if a Mortgage Broker is approached as a first option. The cost may be slightly increased because of the Broker fee that is included but this is easily levelled out with the security of the effortless process towards gaining a secure mortgage.

Grimsbymoneyman.com & Grimsbymoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.

UK Moneyman Limited is Registered in England, No. 6789312 | Registered Address: 10 Consort Court, Hull, HU9 1PU.

Authorised and Regulated by the Financial Conduct Authority.

We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk

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