End of Adverse credit mortgages?

Adverse credit mortgages are coming under increasing scrutiny since the recent credit crunch which has effected the current liquidity markets on both sides of the continent.
An adverse credit mortgage is a mortgage product designed to aid people who have had problems with credit is the past, the lending criteria varied from allowing one or two missed payments to lending money to bankrupts and repossession cases.

They would invariably have high interest rates and lend on a low LTV, loan to value, of the property which ensured high profits for the lender along with security on the property.
Unfortunately clients started having difficulty keeping up with the monthly payments, especially since rates rose in total 1% last year. Even with the recent interest rate cut there are ever more cases in both the US and UK of homeowners being unable to maintain the payments.

What happens when adverse credit mortgage holders want to remortgage?
Last month Kensington, the specialist adverse credit lender, pulled out of the market.
For clients coming off fixed rate mortgage deals onto the SVR, Standard Variable Rate, we may see even more homeowners facing repossession due to higher monthly payments.
Its put the whole industry in a catch 22. One the one hand adverse credit lenders need to tighten their criteria to ensure future borrowers are of lower risk. One the other hand homeowners coming off fixed rate mortgages may find it difficult to find an adverse credit lender prepared to take on the old terms.

Does this mean the end of adverse credit mortgages?
Whist there must be a re-evaluation of the lending criteria used by the likes of Kensigton we must also remember that stopping the money is not going to solve the problem, as we can already wittiness with the current LIBOR rate at an all time high and the effect this is having on lenders such as Northern Rock.

Need to re-mortgage your fixed rate mortgage?

Need to re-mortgage your fixed rate mortgage?
Your not the only one, 1000's of homeowners have or will be coming off their fixed rate mortgage this year and early 2008. Many have been on fixed rate mortgages as low as 4.4% and most will be re-mortgaging on a rate over 1% higher in the next few weeks!

Even with the recent interest rate cut by the Bank of England it is thought that homeowners may soon feel the pinch of 4 rate rises whilst they were safe in a fixed rate mortgage.

It doesn't have to be doom and gloom though!
There are several ways in which you could remortgage on a cheap mortgage with similar monthly payments that you've had before.

High Arrangement Fee & Low Interest Rate
This maybe an option if you have a small mortgage and will benefit from the lower interest rates, although the higher arrangement fee may not justify the low interest rate unless its for a long period.

Fee Valuation & Free Legals
Many mortgage lenders now offer free valuations and free legals for people remortgaging, helping reduce the overall cost compared with paying upfront.

Offset Mortgage/Flexible Mortgage
These tend to allow the borrower to over pay their mortgage or offset savings against the mortgage balance. This can significantly reduce the monthly payments or reduce the term of the mortgage. It also gives the flexibility to withdraw money if required.

The one thing to remember is to seek an independent mortgage brokers advice on the best and cheapest mortgage option for you. Most importantly if your coming off your fixed rate mortgage, seek advice sooner rather than later. If your mortgage changes to a Standard Variable Rate before you arrange your re-mortgage you will see a steep increase in your monthly payments.

Don't give the lender a penny more than you need too!

For more information on the 1,000's of different mortgages on the market and to find a local independent mortgage brokers near you then please visit my website FruitMortgages.com