Sometimes life throws challenges that have a negative impact on us, these times can leave you feeling that you are stuck and cannot move on. I am happy to say that this is not the case and now there is more help for people in this situation.
This article will help to make one the most emotionally challenging issue easier to deal with, my name is Hadi Naqvi, a Registered Individual from Beneficial Mortgages and I have been a mortgage adviser since 2006.
So in this video I will look at the Credit Impaired market and help improve your understanding of what Credit Impaired means and how lenders are rising to the challenge to meet the demands of this section of society.
What is Credit Impaired, Impaired credit occurs when there has been a deterioration in the creditworthiness of an individual or entity. This is usually reflected through a lower credit score, in the case of an individual, or a reduction in the credit rating assigned to an entity or debt issued by a rating agency or lender
This happens when a payment is late on a credit card or there are successive missed payments either due to loss of income or other factors. If the trend continues, this can lead to a Default Notice being applied by the creditor, which can become a County Court Judgement (CCJ) if the trend continues. This has an impact of the credit profile and once applied, it remains on the credit file of the applicant for 6 years from the point the notice or judgement is applied.
Further to this would be IVA – Individual Voluntary Arrangements, which are Court Approved payments to creditors over a period of 5 years if the debts are over a certain amount. If under it would be a Debt Management Plan, but the same rules apply, which are yearly reviews to ensure that payments are going to creditors and on the successful completion, the remaining debts are written off.
Full and Final Settlements can help when an amount has been negotiated as a one off payment to pay off a portion of the outstanding debt and have the remaining written off
The final aspect is Bankruptcy, where all debts are written off, but assets can be seized to help repay costs.
Lenders have opened themselves up to helping provide mortgages to people whose adverse credit has become historic, such as 3 years from being discharged from Bankruptcy or an IVA. Some lenders are ignoring CCJs and Default notices under a certain value, but would need to be looked at on a case by case basis. When thinking about these kinds of lenders, there is an idea that the rates or the fees would be expensive and with some lenders that would be the case, but the trend is not that more lenders are giving deals which are cheaper than you would think.
This is just the basics and I hope that you have felt at ease, there are as with everything, different aspects to the Credit Impaired market such as Bridge Loans and Second Charges which will require detailed advice on a case by case basis, so click the link if you would like more advice or contact me on the number displayed below.