Help to Buy Mortgage with Bad Credit
by Digital Zone digital marketerThe Help to Buy scheme is a
government program set up to improve the property marketand help prospective
homeowners to buy new ahouse for the first time. The program includes a loan
amount where the state lends money to first-time buyers to finance a newly
constructed place.The government provides a loan of up to 20% against the value
of the property, interest-free for the first five years. In London, the same
loan percentage is raised to 40% due to high property values.
The eligibility criteria of
the program are as follows:
1.
You need to be a first-time buyer.
2.
The property should be within the regional
price cap.
3.
You should not own any property previously within
UK or abroad.
4.
A legal declaration that announces you as a
first-time buyer.
5.
The property should be bought from a
registered homebuilder.
There are various regional
price caps defined by the government. The lowest is North East where the
maximum property price cannot exceed 186,100 pounds. The highest price cap is
of London that is 600,000 pounds. Other regions such as North West, Yorkshire,
East Midlands, West Midlands, South East and South West also have their own
price caps that range in between the afore mentioned price limits.
With the loan and a 5%
deposit, you can apply for a 75%loan-to-value mortgage(55% in London). This
places you in a far better financial position in comparison to without the loan.The
loan not only reduces monthly mortgage payments but the debtor also becomes the
immediate owner of at least 25% of the property.
Previously, credit score
played a vital role in Help to buy program. A Bad
Credit Score made it difficult for people to avail the scheme. However,
the recent changes in criteria allow people to apply and avail the scheme even
without a perfect credit score. According to the Scheme you can apply for the
program if you have been discharged from bankruptcy for a year.
Dissolving a bankruptcy
means that you are discharged from any and every kind of debt claims. The year
that follows acts as a probation period, during which, you are assessed either
you are capable of future lending or not. It can be said that it acts as a
grace period which can help you to portray that you are now a responsible
borrower. Similarly, you need to have an IVA. The individual voluntary
arrangement (IVA) allows the lender to understand how you would pay back the
conceived loan. It acts as a legal agreement between the lending party and the
borrowing party. Since it approved by the court, your lender can only ask for
payments as per the prescribed time period by the court. You can have an IVA
set up, through a qualified person, that suits your need. You also need to have
no mortgage arrears for a year as well. This again indicates that you are a
low-risk borrower and would return the money. Furthermore, it indicates that
you are in a better financial condition through the course of a year.
Often times the hopes of
buyers are shattered by the official statement of the program that clearly
states that it dismisses ‘credit-impaired customers’. However, let us assure
you that this is not entirely true. If you comply with the above-mentioned requirements
that include no bankruptcy, having an IVA and no outstanding payments you can
apply for the program as you are not a credit-impaired customer anymore. This
means that no one can stop you from availing the scheme as you are in line with
the legal protocols of the program. But there is a slight catch. Since you have
a history, you would have to go through extra assessment. This commonly is some
extra checks and assessment of your financials- income, outgoings and any other
financial commitments. All of this is done to ensure that you would be able to
pay back that loan alongside your mortgage payment.
The next step after applying
for the loan is to find a help to buy mortgage. The process is fairly simple
and is a lot similar to any other conventional mortgage program. Our online
mortgage advisors can navigate you through the entire process and also provide
free mortgage advice. For bad credit situations, unfortunately the procedure is
a little complicated. With bad credit score, most of the mainstream lending
institutions would reject your application. This is because their institutional
guidelines would not allow them to extend a mortgage to a bankrupt person even
though the bankruptcy isdissolved. Yet, there are other lenders that specialize
in bad credit lending. These institutions or lenders would facilitate you at
ease. They would be lenient while assessing your application and past
activities would not be an issue if you have shown improvement.
Making a convincing credit
file is tough especially with bad credit. Our mortgage advisors can help you
with that as they are extremely dedicated and highly trained individuals. They
would create your file in such a manner that it blemishes all kind of mistakes
that you have made in the past. Furthermore, they would work hard to ensure
that you get the best deal as most of the bad credit lenders do not advertise
to the public.
To sum it all up, bad credit cannot stop you
from getting your own house. You just need to act responsible now. Feel free to
contact us anytime through our website at Independent
Mortgage Brokers. Our team assures you that you would be served in your
best interest. A bonus tip before
leaving, you can always approach the mortgage lenders or the loan program with
a greater down payment. This would help you to gain their trust as well as it
would reduce the interest rate that in turn would reduce monthly payment.
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Created on Apr 9th 2021 00:59. Viewed 224 times.