Borrow it

Its certainly easier said than done, there are many misconceptions about borrowing, the key one in particular is that it is easy to borrow money.

Lenders have a duty of care towards their customers to check whether they should lend the customer the amounts being applied for, in simple terms, underwriting.

Underwriting examines a clients circumstances with particular reference to their age, occupation, income, level of outstanding loans and credit agreements and the conduct of current and previous credit agreements. The level of security being provided will also have an impact on whether a lender will be willing to provide the funding requested, in the case of property, this can be the level of deposit being put down on a property or the amount of equity remaining.

Lenders will usually ask for proof or evidence of income, residency, loan or mortgage payments to fully quantify a client’s position. A lender is perfectly within their rights to request further documentary evidence which can seem extensive, but is essential all the same. Be prepared to provide:
-Passport, Driving Licence, or other proof of your identity
-Latest Utility Bill (mobile phone bills not accepted!)
-Latest Mortgage Statement or reference form your existing lender including second mortgages
-Latest 6 months bank statements
-Latest 6 months payslip
-Latest 3 years Self Employed Accounts and/or reference from your accountant and/or 3 years SA302 Self Assessment forms
-For Controlling Directors (over 20% shareholding) latest 3 years company accounts and/or a reference from your company's accountants
-Latest 6 months business bank statements
-Copies of Credit Card statements

In recent years, lenders have relaxed a little on some of these requests, especially for those clients whose credit history is impeccable and are borrowing a low percentage of the value of their home. Following recent events in the 'credit crunch', underwriting has tightened up again - so be prepared!

If a lender is happy with these and other criteria, the property itself, particularly its value and current condition will be the final determining factor.

This all seems very straight forward and for most clients, it is. Problems arise when there are aspects of a clients circumstances that fall into 'grey areas' of a lenders criteria or outside of it all together.

Aspects such as:
-Self employed with incomplete, insufficient or non-existent account
-Borrowing with little or no deposit or equity
-Interest only loans with no repayment vehicle
-Mortgage term extending beyond retirement age
-Borrowing too many times a multiple of your income
-Large balances on credit cards, loans or other credit agreements
-Missed payments on mortgages, loans or other credit agreements
-County Court Judgements or Defaults
-IVA's or Bankruptcy

'Credit Crunch' - just another buzz phrase or a real threat to the housing market and economy?
Its hard to judge just what impact the so called 'credit crunch' will have in the years to come but the immediate future can certainly look very bleak indeed.
If you are a home owner, the chances are your property value has fallen, if you have a mortgage as well, you could well be coming to the end of that amazing deal you secured a few years ago only to be faced with rates a few percent higher than your current deal provides. Add in those clients who borrowed more than 90% or 100% of their property value and the 'credit crunch' will really start to take its toll.

Advice on the right way forward has never been more valuable than it is today. We can introduce you to advisers who have a deep understanding, expertise and experience of dealing with how to structure borrowings in the most efficient manner and how best to protect you against the worst that could happen.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Borrow it

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