Bad Credit Shared Ownership Mortgage
Bad Credit Shared Ownership Mortgage
The Credit Crunch
A credit crunch is a surprise reduction in the availability of finance (or “Loans”), which may be due to increased fear of risk, a change in market conditions, or even a tightening of under-writing. A prolonged credit crunch is the opposite of the good times lending practices when banks feel relaxed.
The credit crunch has followed woes in the US adverse lending sector, which specialises in supplying finances to people with bad credit histories or who are on low incomes. This lowers money supply, which amplifies a recession effect.
Experts are increasingly worried that the credit crunch in the adverse mortgage market could spread into personal loans. A credit crunch is what can happen when banks start storing cash.
Investors are concerned that fallout from the credit crunch in the US is much more widespread than originally thought. Major player Merrill Lynch has stated concerns of a world credit crunch as central banks around the world tighten banking policy, advising clients to be risk adverse and switch to safer forms of finance over the forthcoming months.
But the Fed regards the auction process was originally installed to ease the credit crunch and was not aimed at bailing out any specific lenders or banks. Here are some examples of how the property market may change, and some food for thought as to what could be done to stop the credit crunch biting too hard. However for people with clean and long standing good credit, (the credit crunch) will not have much effect.
The credit crunch has already claimed dozens of mortgage companies that have either gone out of business or filed for bankruptcy protection, including Unity and Kensingston’s adverse lending arm. Underwriting policies will have to be tightened, firmer regulation and a reduction in wide consumer spending habits.
2008 could be a tough year, especially the first half. Lending policies are thought to be firmer. House prices could drop. Lending volumes could drop. And the general economy could suffer as public spending diminishes.
About the Author
Pat Lee has been a UK mortgage broker for over 10 tens with a vast knowledge of buy to let, commercial, insurance and residential mortgages. http://www.MortgageHome.co.uk
Shared Ownership/Guarantor Mortgage/Bad Credit?
Hi all,
Im 30 and stupidly have a very bad credit history so thought i couldnt get a mortgage. I earn £19500 a year and have found out that you can buy a 2 bed flat in Cardiff on a 50/50 shared ownership scheme here for £60000 share and £120 rent to housing association for the other £60000. My question is is there any way my parents who are in their late 60’s with a £400 000 house (they have no mortgage) act as guarantor on the £60000 mortgage or even get a mortgage in their name for this property? Im not sure if they would be penalised due to their age? They have also offered to pay a £5000-10000 deposit if required.
Any advice would be great!
Firstly have you seen a copy of your credit report to confirm your credit ’status’ – may not be as bad as you think. Secondly if you are behind with debts etc try and get them at least up to date, or even paid off if you can afford it.
On the subject of guarantors, lenders will need to know the INCOME of guarantor and base lending decision on that. However not sure if any lender accepts guarantor on Shared Ownership properties. The deposit would certainly help your case.
Parents could raise £60k with an Equity Release mortgage secured on their home (income irrelevant in this case) This would need detailed family discussion, especially if you have brothers and sisters. Speak to a qualified Independent Adviser ( contact me if you wish). Good luck
Senate Session 2010-04-21 (09:51:58-10:45:52)
