Check Your Loan Score
Want to know the big trade secret? Whether or not you get a loan simply depends on how you meet specific criteria.
When you apply to the lenders all they want to know is how you match the following.
If you match all of them, you're the "model borrower".
You should be able to get a loan for the lowest interest rate available.
However the fewer of the following statements you answer "yes" to, the more expensive the loan will be.
The Model Borrower:
Owns a home
(No? See How this affects you)Hasn't fallen behind on their Mortgage Payments
(No? See How this affects you)Has owned their home for more than 12 months.
(No? See How this affects you)Is employed full time
(No? See How this affects you)Has no County Court Judgements or "defaults" registered against them.
(No? See How this affects you)Their home is valued at £10,000 more than their mortgage. (For example they owe £90,000 on their mortgage but their home is valued £100,000 plus)
(No? See How this affects you)
If you fit these "model borrower" criteria, you're sitting pretty
You can get the best loan rate
going. Just make sure you shop around for the best deal.
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You don't meet all these criteria?
If so, the number that you do meet is what affects how much a loan will cost you.
Not
up to date with your Mortgage Payments?
Not lived in your current home for more than 12 months
Home isn't
worth £10,000 more than your mortgage?
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Not a Home Owner?
The less you match the "model borrower" the more a loan will cost you.
A home owner is eligible for a secured personal loan / home owner loan ie one secured against the property. If the borrower defaults the lender has a claim on the property.
If you don't own property then you can take out an unsecured loan. These are more expensive and take much longer to arrange.
There is an argument that there's no such thing as an unsecured loan in that if you default, when push comes to shove, what possessions you have could still be seized by the lender to pay what you owe.
However truly unsecured
loans - where this can't happen - are available. Just make sure that if you are
paying over the odds for one that it really is an unsecured loan.
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Not up to date with your Mortgage Payments?
The less you match the "model borrower" the more a loan will cost you.
If you are behind on your mortgage payments it may still be possible to get a loan. It'll be a "specialist plan"and cost you more than if you have a "clean" credit history.
Your best bet is to talk to a loan broker
and see what's possible.
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Not in Full Time Employment?
The less you match the "model borrower" the more a loan will cost you.
For example you may be self employed rather than "In full time employment". Many lenders will use this to charge you a higher rate than someone who is employed.
(Note some finance brokers - like the ones you can apply to
from here - have access to lenders who don't discriminate against the self employed
in this way provided certain other criteria are met eg you can show 3 years accounts
etc).
Your best bet is to talk to a loan broker and see
what's possible.
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Bad credit history?
The less you match the "model borrower" the more a loan will cost you.
If you have a bad credit history there are numerous "adverse credit" loans available, particularly if you own your home. They'll just cost you more than if you have a "clean" credit history.
Your best bet is to talk to a loan broker and see what's possible.
Shop around as the deals on offer can vary greatly. Don't just grab the first offer.
There's
a whole industry based on the misplaced gratitude of people with bad credit histories.
They're so relieved that anyone will lend to them that they accept much
more expensive deals than necessary.
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Your home is not valued highly enough?
The less you match
the "model borrower" the more a loan will cost you.
In this event it should be possible to arrange a loan but it'll be a "specialist plan" and be at a higher interest rate ie cost more.
Your best bet is to talk to a loan
broker and see what's possible.
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