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Do I need a solicitor to remortgage?

Quick answer, not always. Whether you need a solicitor of not will largely depend on the complexity of the remortgage and whether you’re changing lenders or not. 

When don’t I need a solicitor for a remortgage?

You don’t need a solicitor to remortgage if you’re doing the following:

  • Getting an advance. If you’re borrowing more on your existing mortgage with your current lender, then no legal charges are involved in this type of arrangement. 
  • Product transfer. If you are staying with the same provider but moving to a new rate or a deal, it doesn’t require any additional legal work. 

When should I use a solicitor for a remortgage?

Here are a couple of situations when you’ll need a solicitor to be involved:

  • Add someone to a mortgage. If you’re adding a new person to your mortgage, e.g. a friend or partner you’ll need a solicitor to draw up paperwork to reflect a change in ownership. This process is referred to as a transfer of equity. 
  • You are removing someone from a mortgage – the reverse of the above. The ownership of the property is changing, and the documents need to reflect this. 

The majority of lenders will include free legal services when you remortgage (Friends Capital can advise on this). If your chosen lender doesn’t offer a free service then shop around.

Should I use the remortgage lenders’ solicitors?

If it’s free and part of the service then you won’t have much choice, however, if you’re paying for your own solicitor, you have the right to shop around. 

What does the remortgage solicitor do?

Remortgaging is undoubtedly less complicated than purchasing a home; the following is usually checked as part of the process. Some of this may not need to happen if you are staying with the same lender.  

  • ID checks – to protect against money laundering
  • Check your existing mortgage – they’ll check how much you owe and if there are any exit or early repayment fees
  • Valuation – your new lender will value the property and provide a mortgage offer to you.
  • The fine print – your solicitor will check over the terms of the mortgage offer and raise any issues with you.
  • Land registry – they’ll check the land registry records to make sure nothing has changed since the process began
  • Completion – your solicitor, will oversee the completion – paying off your old mortgage and any fees and send the remaining money to you. 
  • Update the land registry – once this has all happened, they’ll update the land registry with the new details.

Do you further questions?

Contact Friends Capital – we’re here to help. Our team has vast experience in the remortgage process and can help you find the best lender for your circumstances. 

How lenders decide to give you credit

When you are looking for credit, the lender will need to make a decision. They will look at various factors to decide to offer you a loan or any other form of credit. By looking at these factors they are able to determine the risk of lending to you. Based on the level of risk, your loan may be declined or approved. 

If you have bad credit, you may still be able to get a loan or mortgage. The lender may give you the credit with a higher rate of interest to offset the risk. Here we take a look at what lenders use to decide to give you credit.

What lenders look at before offering you credit

Any application for credit will need a credit check, but that is not all lenders will look at. Your credit score will be the main factor, but other things are taken into account too. Lenders will use the following to decide whether to give you a loan:

  • Credit score
  • Employment history
  • Income
  • Length of time at current address

Credit score – Your credit score uses various information to show an indication of the risk of lending money to you. Different credit agencies hold information about you. A lender may apply to one or more of these to assess your suitability for a loan or mortgage. Please read our 7 tips for improving your credit score.

Each lender or financial institution will usually have a minimum credit score they will accept. If your score is below this, the loan application may be refused. You may still be able to get a loan, but the bank may decide to offer you a lower amount.

When you apply for a loan, the bank won’t tell you your credit score, but you can ask which agency they use. You can request a credit report from the credit agency. 

Employment history – Your credit score is essential, but lenders are also starting to look at employment history. A proven track record with the same company for several years is more appealing to banks. It shows that you have a stable job and a reliable income. You will be able to make your payments each month and be more likely to keep up with loan commitments.

If you have a history of jumping from job to job, a lender may be less likely to offer you credit. It can cause concern to a mortgage company if you tend to move position regularly. You may not be able to get the loan you want. The lender may still offer you a loan but may offer a higher interest rate.

Income – Your income is just as relevant to a loan company because it shows what you can afford. A steady income indicates that you will be able to manage your money. Inconsistent earnings, such as commissions, etc. may not be taken into consideration. If you have a low income, there may not be enough money coming in to meet the debt repayment. 

Personal income is a big thing to a lender and will affect the loans and interest rates you can get. Bear this in mind when considering any loan amount you may want.

Length of time at current address – As with job stability, the length of time at your current address is also important. If you have been at your existing home for many years, it’s a good sign to lenders. It shows you can manage mortgage or rent payments. The bank will see that you can handle financial commitments over a period of time.

Information on your credit file

As your credit score is an integral part of a loan application, it is crucial to make sure the information is correct. Credit reference agencies keep information on your borrowing and payment history. Any application for credit allows the lender to check your credit reference file.

Credit reference agencies collect information from:

  • Electoral roll – addresses where you were registered to vote and the dates
  • Account information – your current loan commitments and bank account activity
  • Public records – they will see any bankruptcies, court judgments or debt relief orders
  • Linked people – anyone you may be linked with financially, such as a joint account or mortgage
  • Searches – details are kept about any credit searches over the last 12 months

There are three main credit reference agencies. A lender may use one or more of these when deciding on your loan. If you are refused credit, you can ask which agency was used. You will be able to apply to that agency and see your information. 

It is crucial to go through everything they have on your file. If there are errors, write to them and let them know. The errors may be affecting your overall credit rating. Getting the problems fixed can help improve your credit score.

What to do if you have a low credit score

If you have a low credit score, you can still get some forms of credit. Many banks have loans for low or bad credit scores. These types of loans often have higher interest rates than others. Because it is considered a higher risk, the bank raises the interest rate to offset the loan risk.

Alternatively, the bank may ask for a guarantor for the loan. A second person signs an agreement to repay the loan if you don’t. It can allow you to get the credit or loan you need. The bank has another person that will be liable for the loan, so they take less risk.

A guarantor will be on the hook for your loan if you don’t pay it. Make sure the person is aware of this before signing anything. The bank will also check the credit score of the guarantor so you will need someone with good credit.

If you are looking for mortgage deals or loans for people with bad credit, we can help. We work with a variety of banks and lenders. Our experts can find the right solution for your credit needs.

Remortgage with Bad Credit

If you have bad credit, you may think you are not able to remortgage, but it is possible. It may be easier for people with good credit to remortgage, but there are lenders out there that will work with you. People find themselves with bad credit for many reasons. It can affect the loans or remortgage deals you qualify for; however, there are options available.

Remortgaging with poor or bad credit

While many lenders will not be forthcoming with offers for remortgaging with bad credit, it doesn’t mean you won’t be able to get the loan you need. Bad credit is an issue for banks because bad credit makes you:

  • Seem a higher risk to lenders
  • More difficult to get loan approval
  • Additional work is required for bad credit remortgage offers

Although bad credit does make banks cautious, some financial institutions are willing to look past this. Bad credit history doesn’t always mean you can’t handle remortgage payments. Some lenders are able to consider these problems and still offer remortgaging services.

Independent financial advisors will be able to point you in the right direction. They will know which banks specialise in remortgages for people with bad credit.

Should I remortgage if I have bad credit?

Taking out a remortgaging offer can be beneficial for many reasons. However, it depends on your financial situation and why you are looking to remortgage. The main reasons people look for a remortgage deal include:

  • Moving to a better mortgage rate
  • To raise capital 
  • Debt consolidation
  • Releasing equity

As mortgage deals change all the time, your current agreement may not have the best interest rate. Looking at remortgaging can help reduce the overall payment you will have to make. You may want to make a large purchase or have a big event coming up. A remortgage can give you the extra money you need for this.

Debt consolidation remortgages are a very popular solution. People with multiple loans and credit card debt can benefit from moving everything onto a remortgage. Lower interest rates and paying the deficit over the term of the mortgage help regain control of finances. 

You may have equity in your home but don’t want to sell it to release the capital. Remortgaging can release the equity in your home, giving you access to that cash, without moving.

How to remortgage with bad credit

Not everyone has the same credit problems so your situation will need to be considered when looking at remortgaging. There may be a simple solution to get you a good deal, or other action may be required. Here are some simple steps to get you started:

Your credit report – A first step to getting a bad credit remortgage deal is to check your credit report. Credit reference agencies hold information on your debts and payment histories. The bank will use this to consider whether you will qualify for a remortgage.

By looking at your credit file, you can see what issues are on there. It is also vital to check it thoroughly. If there are any items on there in error, you can inform the credit reference agency. Cleaning up any issues or clearing debts can improve your credit score. Check out our 7 tips to improving your credit score.

FriendsCapital has partnered up with checkmyfile – the UK’s only multi-agency credit report – check your credit report.

Look at your options – While it may seem the best idea is to go to your current bank, this isn’t always advisable. High street banks and lenders tend to favour people with good credit. Remortgage applications with your bank may be more likely to be refused. There are several lenders and bad credit remortgage companies that will be more suitable for you. 

A bad credit loan is more of a specialist solution to debt management. Therefore you will want to use an expert advisor. They will have knowledge of the best lenders to approach and which application is more likely to be successful.

Know what you can afford – It may seem obvious, but you will need to consider what you can afford. Depending on your income, your remortgage will have to be within your limits. Your financial situation should remain the same or get better with the new offer, so make sure you know what payments you can handle.

Lenders assess income differently, so a financial expert will be able to go through this with you. Generally, you will be able to get around 4x your income. Your fixed salary is usually only considered so overtime or bonus payments won’t form part of the calculation. Similarly, if you are self-employed, some lenders may not consider you for a remortgage. The advisor will be able to approach the right lender based on your situation.

Should I use my mortgage for debt consolidation?

If you have multiple debts and you’re struggling to manage them you might want to consider a debt consolidation mortgage. If you have different loans and credit cards, you will have different interest rates. Managing all of those individual payments can leave you feeling overwhelmed. Varying interest rates can make it feel like those debts never go down. 

As a homeowner, you do have some options when it comes to managing debt. You can choose to have a secured loan to have a single payment. If you have equity in your home, you can remortgage and consolidate your debts. Whichever you choose you will be securing the debt against your home. Because of this, you will have to keep up with payments, so your home is not at risk.

Mortgage for debt consolidation

You may have taken out loans or credit cards to clear debts in the past. While you may think that this is the right thing to do again, you do have other options. Interest rates on credit cards and loans tend to be higher than mortgage interest rates. The best interest rates are on secured loans or mortgages. Because of this, you can transfer debts with higher rates to a mortgage to save money.

The repayments of the debt consolidation are spread over the term of the mortgage. Typically, your debt consolidation mortgage payment is the same or lower than your old amount. It makes it much easier to pay and manage your money going forward.

How a debt consolidation remortgage works

A remortgage will provide you with a lump sum of money. It can be used to clear debts, so you only have a single payment. Not only does it save you money in the long term, but it also makes it more simple to stay organised with your finances.

When you are looking at debt consolidation mortgages, you should consider:

· How much you need to borrow

· The repayment terms

· Interest rates

· Loan fees

How much can I borrow on a remortgage?

The amount you can borrow with a debt consolidation mortgage depends on several things. The lender will want to check into several factors before loaning you money. The bank will look at:

· Your income

· Possible payments you can afford

· Value of your home

A mortgage lender will look at something called the loan-to-value ratio. The number is the amount you want to borrow in comparison to the value of your property. It is usually a percentage number and gives the bank an indication of the equity in your home. When looking at these factors, the bank will then calculate how much they are willing to lend you.

Debt consolidation mortgage repayment terms

The repayment terms of a debt consolidation mortgage will be explained when applying for the loan. A significant advantage of adding multiple debts to your mortgage is a single payment. By only having one payment rather than numerous different lenders to pay, your finances are easier to manage.

Repayment terms will give you one fixed amount to pay each month. The loan advisor will go through your finances with you to make sure payments are manageable. A remortgage may have a slightly lower payment than your current mortgage because of the equity in your house. All of this will form part of the calculations so you will see this before applying.

A financial advisor will look at the full picture of your finances. Using an impartial expert will make sure you get the best advice. Any new financial commitments will need to be affordable, and an advisor will help with this.

Interest rates on remortgages

While adding debts to your mortgage may seem like the right move, you will need to have the full picture. Always look into the interest rates on debt consolidation mortgages. Paying the debt off over a more extended period of time may mean you ultimately pay more. However, consolidating debt with a mortgage is the best thing if you are struggling.

A lower mortgage payment will give you breathing space. You will be able to manage your money and have all of your debts under one payment. Of course, the best course of action will depend on how much you owe. Taking financial advice from an expert will help you find the right type of loan.

Loan fees for debt consolidation

The interest rate and repayment terms are important, but you will also need to look at other costs. A debt consolidation remortgage may have loan fees. The cost of the fees will vary, so make sure you know the exact costs of any loan. It needs to make sense overall, so higher loan costs may not be suitable for your situation.

Make sure you are aware of all the cost and loan arrangement fees before you agree to the loan. The lender or financial advisor will give you all of this information.

How do I consolidate debt onto my mortgage?

When you are looking at remortgage offers, there are usually two options for debt consolidation:

· Moving the debt to a new lender

· Securing a loan to your current mortgage

If you choose to remortgage your total debt with a new lender, you can usually borrow a higher amount. It allows you to release more equity from your home for lower payments. However, if your current mortgage is on a good rate, it can change with the new mortgage. So, you will need to make sure it makes financial sense in the long term.

You can choose to secure a loan to your mortgage to take care of your debt. It can be a good option if you are not able to prove your income if you are self-employed, for example. Going this route allows you to keep a good mortgage deal if you currently have one. However, this type of loan usually has a higher interest rate than taking out a debt consolidation remortgage.

Is a debt consolidation remortgage right for me?

The suitability of a remortgage for consolidating debt will depend on your circumstances. It is typically helpful for homeowners that have a lot of credit card debt. As the interest rate on the remortgage is lower than credit card rates, it saves money. However, certain circumstances may make this type of loan unsuitable such as:

· The amount of equity you have in your home

· Does your current deal allow you to borrow more?

· Your mortgage term

The amount of equity you have in your house will be a factor in the remortgage deals you get. Your current mortgage may not allow further borrowing so you may need to move lender. If you have a fixed-term mortgage and that term hasn’t finished, you may have to wait. If you choose to move mortgage during the term, you may incur additional charges.

A financial advisor will be able to check all of these things for you. They will look at your financial commitments and current loans to see if a remortgage is the best option. 

Friends Capital can help you, talk to one of our advisors today!

Guide to saving a deposit

When you are applying for a first-time buyer mortgage, you will need a deposit. With the cost of rent almost as high as mortgage payments, saving can be tough. The cost of living can leave you with very little leftover. So, if you are hoping to get on the property ladder, we have some tips on saving for a mortgage deposit.

Work out what you need

first-time buyer mortgage can require up to a 20% deposit. Depending on the cost of your first home, it can mean you need a substantial amount. It can feel overwhelming if you require a large amount for a deposit. But, some things can help reduce the amount you need:

· Ask your parents for help

· Buy a home with friends or family

· Equity schemes

· Buy part of a property

Ask your parents for help – If a large deposit for your first home is what you need, you could turn to the bank of mum and dad. Your parents may be able to help with a cash gift or possibly be a guarantor. Bear in mind though they will be liable to pay the mortgage if you can’t if they act as guarantor.

Buy a home with friends or family – Other people you know maybe in a similar situation and not be able to get on the property ladder. If so, you can join together to buy your first house. Set out everything from the beginning. You will need to have a clear plan if someone wants to sell their share later.

Equity schemes – Renters of council or housing association properties can be eligible for shared ownership schemes. If you are renting one of these places, you can apply for an equity scheme. In these types of deals, you buy a portion of the house and pay rent on the rest. You will have a smaller mortgage and deposit but still, pay rent.

Buy part of a property – If you do not rent from a council, there are other types of equity schemes you can get. Help to Buy allows you to buy a new home with help from the government or the builder. Typically you will only have to give a 5% deposit with the scheme providing the rest. It is usually a free loan for so many years and will be paid back later. So, you will need to plan how you will pay it back.

How much can you afford to save each month

Once you know how much you need for a deposit, you can start saving. Look at your expenses every month and be realistic about how much you can put away. Regularly saving a little each month is a better strategy than relying on one-off bonuses.

Set up a savings account, you can easily do this online or pop into your bank. Once you have your savings account, set up a standing order for each month. Only set the amount at what you can comfortably afford. If you set it too high, you will find it difficult and may give up altogether.

Make sure you are budgeting wisely

When you look at your outgoings, make sure you are getting the best deal on everything. Look at your gas and electricity tariffs and compare mobile phone deals. You may be able to increase your savings by moving to better offers for your insurance as well.

You will also want to make sure you factor in unexpected costs too. Replacing a broken appliance or needing repairs on your cars will all need to be part of your budgeting. 

Make the most of your savings

The savings account you put your deposit money in can also help with building up funds. So, compare the best savings account rates for the best deals. If you can afford to save a set amount each month, then a regular savings account will work for you. The amount you save may change each month so you can choose an instant access account.

Banks have different offers when it comes to a savings account so do your research. Online accounts can sometimes offer higher rates, so make sure you look into these too.

Reduce your monthly costs

If you want to save for a mortgage deposit even faster, there are some steps you can take:

· Move back home with your parents

· Find a smaller property to rent

· Rent with someone else to share the costs

Finding the best first-time buyer mortgage

As a first time buyer, you will find lots of mortgage deals out there. It’s a big commitment so you will want to find the best deal possible. Many banks and lenders will offer a mortgage consultation service. You will want to use an impartial advisor. They will be able to compare the best first-time buyer mortgages for you.

An expert on first-time buyer mortgage deals will look at what you have in savings and what you can afford. The advisor will be able to show you which offers are most suitable for your situation. At Friends Capital, we offer a free mortgage review service. We have a specialist first-time buyer team that will be able to help you get the best mortgage for you.

Seven tips to improve your credit score

If you are considering applying for a loan or have previous credit commitments, your credit score comes into play. Maintaining good credit is essential so that you can get loans or mortgages when you want them. Your credit rating affects how much you can borrow, but it can also affect the deals you qualify for.

Your credit score

When you take out a loan, credit card, or another type of credit, your credit score is used to determine if you are eligible. The information held on your credit report will establish a credit score. Your credit rating is based on:

  • The information on your credit application 
  • Your credit file 
  • History with the lender you are asking for credit 

Data is held securely by credit agencies. It will contain all your history of utility company accounts, credit cards, loans, and any other type of credit. These agencies collect the information and provide it to the lender you are asking for a new loan.

The lender uses all of the data on your credit report to determine whether they are willing to give you a loan. The data helps them to assess the level of risk in loaning money. If your score is low, you may be refused the credit application. You may still be able to get a loan, but it will be at a higher rate of interest to protect the lender.

FriendsCapital has partnered up with checkmyfile – the UK’s only multi-agency credit report – check your credit report.

7 tips to improve your credit score

There are some things you can do to improve your credit rating. You can take action today to help rebuild your credit score. Taking these steps helps to improve your overall score, and so will give you access to better credit deals.

1. Electoral roll register – If you are not on the electoral roll on your current address, then that can affect your credit score: register to vote, either online or by post. Registering to vote is a quick and easy first step to rebuilding your credit.

2. Manage your money properly – If you tend to pay bills late or wait for reminders, you need to stop doing this. Late payments or issues with paying bills is a big red flag to lenders. Make a plan and look at when your bills are due. Have your bills automatically pay by direct debit and make sure you have enough money in the bank to cover them. Consistently paying utility bills, internet, and phone bills prove you can take care of your money. Lenders will see this and be more inclined to offer credit to you.

3. Mistakes on your credit file – You can apply for a copy of your credit file from the agencies that have the information. When you receive your report, check it thoroughly. If there is any activity on there that you don’t recognise, report this immediately. Mistakes on credit files can happen, so check that everything on yours is as it should be.

4. Manage your debt – If you currently have a large amount of debt, you will have to reduce this if possible. A high amount of debt and loan commitments makes lenders less likely to give you more financing. Massive obligations make it more challenging to manage any new ones. Aim to pay off credit cards and other loans as quickly as possible.

5. Check if you are linked to someone else – Holding joint accounts with other people, such as a spouse or family member, can affect your credit. If that person has a bad score, it can change yours too. If possible, clear any joint accounts if you are linked to someone with bad credit.

6. Don’t move too often – If you have moved house regularly, it can affect your credit score. Staying at one address and building a good payment history for a few years will boost your credit. Previous addresses will have to be checked during a loan application, so multiple ones have an adverse effect.

7. Credit utilisation – Your credit utilisation is how much credit you have based on how much you are eligible to borrow. So, your credit score can give you a limit of £5000. If you have £2500 in debt, your credit utilisation is 50%. Using less of your available credit limit is usually seen favourably by banks. Aim to keep your credit commitments to between 25% – 50% of your total credit limit.

Other ways to improve

The above steps will make a significant impact on your credit and give you access to better loan deals. 

But you can also try other things to improve your credit rating. Having no history is just as harmful as a bad one. So, if you have had very little credit in the past, consider taking out a credit card. Credit cards for people with bad credit or no credit are available.

These credit-builder credit cards usually have a small limit. You can use the card to make purchases and pay off the balance each month. The interest rates on these cards are much higher. Because these cards are mainly for people with bad credit, the interest rate reflects this. So, make sure if you do use one of these, you clear the balance each month.

By managing a card like this and successfully clearing the balance, your overall score increases. Good payment history is an indication that you can achieve financial commitments. Lenders will see this and be willing to extend you the credit you need.

Friends Capital help people with all types of credit score

An independent financial provider will be able to give you impartial advice so you can build a good credit score. At Friend’s Capital, we work with all of the top lenders in the UK. If you have bad credit or want to consolidate your debts, we can help. Our experts will be able to find the right product for you. We work with banks that can give you bad credit loans or a debt consolidation loan. Contact Friends Capital today.

What is mortgage life insurance?

A mortgage will be one of your biggest outgoings each month. But how would your loved ones cope if they had to take over this after your death? 

If you have a mortgage, you should consider a mortgage life insurance policy. It will provide you with peace of mind that your outstanding debts and other responsibilities are taken care of properly. Mortgage life insurance, or mortgage protection, is linked to the debt on your property. If you die before you pay off the mortgage, this type of insurance covers the loan.

Types of mortgage insurance

When it comes to mortgage protection, there are two types to choose from:

  • Decreasing term cover
  • Level term mortgage cover

A decreasing term cover policy is a type of coverage that pays the outstanding balance on a mortgage. As you pay your instalments each month on a repayment mortgage, the principal debt decreases. A decreasing term cover policy runs alongside this. So, should you die before paying off the mortgage, this type of insurance pays off what is left owing to the bank.

Level term cover pays a fixed amount regardless of what is on the mortgage. As the amount of payout stays the same, the monthly instalments tend to be more expensive. You may have to choose this type of insurance if you have an endowment mortgage, for example.

Whichever type of mortgage you have, you need to have an insurance policy that provides enough cover. If you have a £250,000 mortgage over 25 years, your plan should cover this.

Choosing mortgage insurance

When you take out a new mortgage, you may have a policy from the lender. If so, the mortgage is covered in the event of your death. However, you may not be getting the best deal. Taking out the policy from the lender only gives you a choice of their cover.

Taking out a policy at the time of your mortgage gave you what was available then. There may be a better deal out there for you now. When looking to change your mortgage life insurance, you will need to make sure the policy:

  • Provides enough cover for the overall debt
  • Covers any new health conditions you may have

Using a professional company that works with multiple insurance companies will help you compare deals. If you took out your policy a long time ago, things might have changed. If you were a smoker before and now you are not, you could get cheaper insurance. An independent advisor will be able to give impartial advice on the best mortgage life insurance policies.

Do I need mortgage life insurance?

It is not a legal requirement to have mortgage life insurance, but you will want to have this if you have dependents. The main reason people have this type of cover is to protect their spouse and children after their death. How will your household cope if you are not there to contribute to the mortgage payments?

The insurance will cover the balance on the mortgage, so your loved ones don’t have extra stress. It is already a testing time when someone passes away, so this insurance gives people one less concern.

Single or joint life policy?

When you look at insurance to cover a mortgage as a couple, you can choose a single policy for each person or a joint policy. There are pros and cons to both, so you should consider this.

Some of the benefits of a joint policy include:

  • Cheaper than two single plans
  • Less hassle to set up if you have no dependents

While this type of mortgage life insurance can be less expensive than taking out two separate policies, you will only get one payout. The payout on a joint policy usually happens on the death of the first policyholder. If you split from your partner further down the line, you will need to find a new plan.

Benefits of two single policies include:

  • Each policy will pay so there are two payouts instead of one
  • You won’t have to find a new plan if you split up

Taking out two single policies tends to be better for couples with dependents. If you have no children, you only need the insurance plan to pay out once. If you do have children, single policies will payout on the death of each policyholder. It will make sure any remaining dependents do not have the responsibility of the mortgage.

Finding the right policy

Depending on your situation, you will need a specific type of insurance. Whether you have children, the value of the property and other debts will all be considerations when looking at insurance. 

Friends Capital works with the top insurance companies in the UK. By comparing the best mortgage life insurance deals on the market, we can find the right cover for you. Our expert advisors can provide you with impartial advice. You will receive all the information you need about insurance so you can make an informed choice. Contact us today.

Bad credit and bridging loans

Bridging loans are a desirable financial solution under many scenarios. Because of this, even people with bad credit may want to make use of a bridging loan.

Can I get a bridging loan with bad credit?

Yes/possibly – There may be times when you are unable to keep up with your financial responsibilities. You may be unable to make payments on loans and other debts for many reasons. You may have become ill or lost your job; not paying is not always intentional.

Whatever the circumstances, if you have had problems in the past, it can affect your credit history. If you have bad credit or poor credit history, it doesn’t necessarily mean you will be turned down for a bridging loan. It may be more challenging to get approval for some types of credit, but others may be possible.

Check your credit report

Make sure you actually have bad or poor credit – sometimes people miss a payment or two and assume they have poor credit this isn’t always the case. FriendsCapital has partnered up with checkmyfile – the UK’s only multi-agency credit report – check your credit report.

What is a bridging loan?

A bridging loan is, as the name suggests, is a type of finance that bridges the gap. It is typically a finance option when buying a house. If you haven’t sold your home but want to complete on a new one, a bridging loan is an answer.

Read more on Bridging Finance here 

These types of short-term loans can be useful if you want to renovate your house before selling it. You may also want to have a bridging loan in place if you are buying property at auction. It is usually a short-term loan of 12 months or less. A bridging loan is paid off when you sell your house. When you take out this type of loan, it will need security, usually a property.

Applying for a bridging loan with bad credit

Even if you have bad credit, you can still get the loans you need. Many lenders are willing to work with you so you can find the right finance solution. Applying for a bad or poor credit bridging loan will require a specialist lender. An expert advisor will be able to look at suitable loan companies for you.

When applying for the bridging loan, you should:

  • Be honest about any issues with your past credit 
  • Provide all the necessary documentation
  • Have property for security

The financial expert will be able to explain all of the documents you will need to complete an application. Having an honest discussion about your previous credit problems is vital. It allows the advisor to choose the right financial lender. They will know which lenders specialise in providing financial products to people with bad credit.

You will have to think about when and how the loan is going to be repaid. If you are using your current house to satisfy the credit, then selling it at the right price will ensure a quicker sale. The bridging loan is either a closed or open loan. A closed bridging loan has a set completion date. An open-bridge loan won’t have a set date for you to pay it off. How you intend to complete the loan requirements will dictate the type of loan you get.

A bridging loan company may consider other assets if you have them. You may be able to use business equipment or items of high value. The advisor will be able to discuss any options for securing the loan with you.

Why a bridging loan is possible with bad credit

When you take a mortgage or other types of credit, your credit history is a vital source of information. The financial institution uses your credit history as an indication of possible payment issues. A mortgage lender needs to know you will pay for the whole term of the mortgage agreement. A bad credit report may give them cause for concern, and you may not get a mortgage.

A bridging loan focuses on the value of the security you are using. The bridging loan application process involves getting a valuation for the security property. As long as your property is valuable enough to cover the loan you are applying for, a lender may give you a bridging loan.

Because bridging loans are this way, the company tends to look more at the value of the property than the credit history. Some big banks or financial companies may not want to risk this type of loan if you have bad credit. It is essential to find the right company, and a financial expert will be able to do this.

Apply Now

If you think a bridging loan is what you need, we can help. We work with many different lenders and can find the right one for you. Specialist loan companies and banks will offer people with bad credit a loan. If you want to apply for a bad credit bridging loan, talk to Friends Capital today.

Becoming a UK landlord

At Friends Capital, we help UK landlords with buy-to-let mortgages every day. There are millions of privately rented houses in the UK, and with demand being higher than supply, more and more people are becoming landlords. With reduced savings rates, renting a property is seen by many as an excellent opportunity to create a passive income.

To become a residential landlord, you may be considering renting out your own home or buying a property to let. It is essential to understand the steps to becoming a landlord, and you should recognise that being a landlord is a business.

You will have money coming in and going out, with expenses and profit. Property has almost always been seen as an excellent long-term investment, but there are no guarantees of success. It is a good idea to speak to someone who is a landlord, to get a better idea of if becoming a UK landlord is for you.

Landlord expenses

Renting isn’t just a buy and forget type of investment. It will take your time, and you might need to deal with issues such as maintenance and repairs, rent arrears, and sub-letting.

You can use a high street or online letting agent, and these will take on the responsibility of some of these tasks. It’s a good idea to create an emergency fund to cover unforeseen expenses. This can cover costs such as a boiler breakdown or periods of vacancy where you might have to cover expenses such as council tax.

Further landlord expenses will include:

  • A landlord license
  • Gas safety checks
  • Energy Performance Certificates
  • Mortgage payments (buy-to-let mortgages)
  • Agency fees
  • Advertising and marketing
  • Professional photos (typically covered if you use a high street agent)
  • Solicitor fees for creating a tenancy contract

While most landlords avoid providing furnishings, most tenants expect you to provide white goods such as a cooker, fridge, freezer, and washing machine.

It is worth considering paying for a membership to a landlord association. The largest of these in the UK is the National Landlord Association. The perks are worth the fee and include:

  • Access to training events
  • Lawyer approved tenancy agreements
  • Discounted trade magazines
  • Advice from professionals
  • Access to networking events and online forums
  • Tenant referencing 

Tenant referencing with the National Landlord Association includes express and comprehensive tenant checks including previous evictions, current debts, credit history, criminal record, and a public record showing if tenants are being sued for unpaid rent or child support.

Do you need a buy-to-let mortgage?

If you have a residential mortgage for your property, then you need to check if you are permitted to rent? You will need to send a consent to rent application or change your mortgage to a suitable buy-to-let mortgage. Leasehold properties may not allow sub-letting, and this can be the case for properties purchased through a shared ownership scheme.

UK Landlord legal responsibilities

Your legal responsibilities as a landlord differ for properties in England, Scotland, Wales, and Northern Ireland. This is also the case for single-let properties and houses of multiple occupations.

Firstly, you should set yourself up as a business owner and register for a self-assessment with HMRC. You will need to apply for a landlord license and renew this every three or five years.

Your property needs to be fit for human habitation and might need renovating to lift it up to these standards. There are 29 hazards to consider, and these are laid out in the Housing, Health, and Safety Regulations 2005. Building stability, damp problems, ventilation, the amount of natural light, and electrical safety all fall within this legislation. You should also make sure that you fit a smoke and carbon monoxide alarm on every floor.

If you take a security deposit from your tenants, then these must be placed in a Tenancy Deposit Protection Scheme

As a landlord, it is your responsibility to ensure your tenant has a legal right to live and rent in the UK. EU citizens automatically have this right, although this may change after Brexit.

Landlords must conform to The Equality Act 2010, and this covers unlawful discrimination against race, religion, disability, sex, sexuality, and gender reassignment. You should also give 24 hours notice if you want to visit the property.

In summary

There is a clearly a checklist of tasks you must complete if you intend to become a landlord. However, the opportunity to create an additional income exists, and with a little preparedness, you can begin a successful venture as a UK landlord.

Guide to buying a property

Buying a property can be a painstaking and complicated process, especially if you’re a first-time buyer or inexperienced on the market. However, even for someone who’s been through the process of purchasing a property, it can be a stressful situation trying to get the best deal when buying.

Here, we’ll detail how you can get the best deal when you’re buying a property – covering everything from viewing, submitting an offer and moving in.

What to do before viewing a property?

Getting a good deal on a property comes down to every part of the buying process, even as early as when you are keeping an eye out for potential places of interest. Here’s how you can get yourself off on the best foot to get the best deal on a property.

Know your budget

Considering the cost of a prospective property against your budget is key. Understanding your limits can save you lots of time.

Often prospective buyers have a budget range, for example, £200’000 – £250’000, having this information is critical when it comes to negotiations.

Friends Capital tip “If you like the property, but the asking price is outside of your budget, it might be worth contacting the estate agent to see if there’s some ‘wiggle room’ with the price. If not, move on – don’t try and spend more than you can afford!” 

 

Know what you want

It seems obvious, but plenty of buyers don’t know what they want when looking for a property. Considering everything upfront can save you lots of time.

What is important to you in a property. Common requirements include;

  • A specific number of bedrooms
  • Good access to public transport
  • School catchment area
  • Off-road parking

A good tip is making a list of ‘must-haves’ and ‘would-likes’ when finding properties. Then compare the ones you’ve found to highlight the best-looking deals.

Get your mortgage in place

Perhaps the most important part of the process is getting your mortgage in-place, of course you won’t be ready to complete yet but you can get an AIP (agreement in principle). An AIP essentially means the lender has confirmed they are prepared to lend to you – so if you find the right property you go ahead!

Friends Capital can help you get an agreement in principle. We are independent and have access to the whole of the market. Contact us for more information. 

The role of an estate agent

You’ll almost certainly be dealing with an estate agent of some kind when buying a property, and it’s important to know that their role is one of a ‘middle man’.

Ultimately they want to a deal that is suitable for you and the seller but a higher buy price is always better – happier seller and happier estate agent, so be careful with what you say.

Personal circumstances are exactly that, personal. Sharing details such as “I need a quick completion” or “this house is the only one that has everything we need.” put the power in the hands of the seller, so be careful. 

Tips for viewing a property

Keep an eye out and ask questions

It can be very easy to get swept up in the process of buying a property, especially if you’re viewing a property you really like. Keep an eye out and ask any many questions as you want, at the end of the day that is the job or the expectation of the person showing you the property.

On the flip side of sharing your circumstances, knowing the seller’s reasons for selling the property can be very important. For instance, if the property is in a chain, then they may need a quick sale which can aid your negotiations. 

Keep your cool

It can be exciting when viewing a property you’ve fallen in love with, and of course, it’s perfectly normal to worry about someone else coming in and making an offer better than yours. But remember to keep calm when viewing a property to keep the estate agent or owner guessing about your thoughts.

If you come across too keen, then the agent or owner will feel that they can get a higher bid out of you. 

Knock on doors and do your research

Asking questions to the seller is essential, but remember they want a sale – so will paint everything in the best light possible when answering. 

Try knocking on doors nearby to get a gauge on the area and your potential neighbours. You might find out that there have been previous problems with the area or the property which the seller may not willingly reveal unless asked directly.

You can use any information you get to get the best deal when buying a property. 

How to negotiate the best deal when buying a property?

Set limits on bids

Getting the best deal on a property is heavily influenced by the bidding process.

It’s best to limit yourself to a maximum bid, after which you agree with yourself to walk away. You never know, if you hit this mark, the seller may only be playing hard-ball to try and get more money out of you.

If this happens, they could well get back in touch to re-negotiate, that puts you as a buyer in a powerful position as it shows their hand in trying to get a sale.

Prove your willingness to complete

You can often convince a seller to accept a slightly lower if you can show you’re willing to get the deal done quickly. You can do this by ensuring you’ve handled all the details and have all your paperwork sorted. What’s more, it doesn’t lessen your bargaining position either as these kinds of details aren’t relevant to a specific property, it just shows you could move for another property at a pace too. 

Your AIP is highly relevant at this stage as it shows you have an amount waiting with the bank and can proceed.

Make your first bid low

It goes without saying; you should never make your highest bid first.

Rarely will a low bid be so derisory that it puts the seller of you entirely – a seller often understands that you’ll be starting with a low offer first and that you’re likely to meet in the middle.

Of course, take care with offers and make sure they are reasonable. Offering £150,000 for a £200,000 property is unlikely to sit well with anyone involved.

Discuss any issues with your solicitor

If anything awry pops up with your solicitor’s checks on a property you’ve had an offer accepted for, be sure to discuss this at length with the parties involved.

If it’s a deal-breaking problem, always be willing to pull out to avoid future costs. But if it’s something less severe, you can use this to re-negotiate to a price which reflects the issue.

Problems can range massively, so be sure to get an expert legal opinion on anything which raises eyebrows.

Friends Capital are here to help! Our team has vast experience helping our clients buying a property – get in touch!

Good luck with your search and we hope you find your dream home. 

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