New restrictions on lending to high-risk customers could lead to a surge in the number of people seeing their mortgage applications turned down, according to new figures.
According to new research, a quarter of all specialist and sub-prime mortgage applicants accepted during last August would now be refused, following changes to lenders' rules.
Mortgage experts said the new tighter controls on Loan to Value (LTV) and credit history were likely to have a significant impact on low-income families or borrowers with a poor credit rating trying to get on the property ladder.
This same market conditions will also impact on remortgages.
The figures suggest that the less well off are going to find it much harder to get their hands on a mortgage deal in future.
The new changes are also likely to provoke a drop in the sub-prime market.
Many first-time buyers would be priced out of the market while homeowners looking to remortgage on a sub-prime deal might find themselves unable to make the repayments.
The sub-prime market is worth about £130 billion a year, including almost £30 billion in new mortgage deals.
Brokers have been warning that the narrowing in availability of sub-prime deals could have severe repercussions for the economy.
The potential impact upon the economy may be considerably more than most commentators have stated as more and more people go into debt management and Individual Voluntary Arrangements (IVA).
There will also be even more home repossessions and the overall result will be a fall in house prices as the money to buy them simply contracts.
Another survey published recently also revealed that about 5 per cent of first-time buyers were leaving themselves vulnerable to a downturn in the housing market.
One in 20 new homeowners took out a 100 per cent mortgage, meaning only a slight fall in the cost of property would push them into negative equity.
Borrowers on 100 per cent mortgage need to be aware that stagnant house prices may keep them shackled to their uncompetitive lender and prisoners in their own home until house prices rise again.
There are many ways of paying for a new home.
There are also alternatives to buying such as renting or leasing.
But what most people still report as their ultimate goal, is to own their own home, and the most common way of getting started with this goal is to get a mortgage.
There are many different types of mortgage and remortgages but they all have one common feature, they are secured over your home.
This means that if you ever become unable to meet your repayments, your home can be seized by the bank who can then sell it in order to get back their principle.
When you're shopping around for a loan, there are certain terms you will need to be familiar with.
For example, mortgages generally come as either a fixed rate mortgage or a variable rate mortgage.
The fixed rate loan will keep the same interest rate and monthly repayment for the whole of the fixed rate period.
For loans that could be the life time of the loan.
This will generally be for a period of 5, 10 or 15 years.
If the rate is fixed for a period, such as the first 2 or perhaps 5 years, and then reverts to a variable rate it is known as an adjustable rate mortgage or ARM.
If you find that you are not offered a mortgage there are a number of things you can consider doing such as renting or leasing a home.
This should be easier to get approval for.
You may also consider saving up for a larger down payment.
This will also make approval more likely.
The main thing you should consider however, is working on fixing your ailing credit score by getting your debts under control and making your repayments on time.
According to new research, a quarter of all specialist and sub-prime mortgage applicants accepted during last August would now be refused, following changes to lenders' rules.
Mortgage experts said the new tighter controls on Loan to Value (LTV) and credit history were likely to have a significant impact on low-income families or borrowers with a poor credit rating trying to get on the property ladder.
This same market conditions will also impact on remortgages.
The figures suggest that the less well off are going to find it much harder to get their hands on a mortgage deal in future.
The new changes are also likely to provoke a drop in the sub-prime market.
Many first-time buyers would be priced out of the market while homeowners looking to remortgage on a sub-prime deal might find themselves unable to make the repayments.
The sub-prime market is worth about £130 billion a year, including almost £30 billion in new mortgage deals.
Brokers have been warning that the narrowing in availability of sub-prime deals could have severe repercussions for the economy.
The potential impact upon the economy may be considerably more than most commentators have stated as more and more people go into debt management and Individual Voluntary Arrangements (IVA).
There will also be even more home repossessions and the overall result will be a fall in house prices as the money to buy them simply contracts.
Another survey published recently also revealed that about 5 per cent of first-time buyers were leaving themselves vulnerable to a downturn in the housing market.
One in 20 new homeowners took out a 100 per cent mortgage, meaning only a slight fall in the cost of property would push them into negative equity.
Borrowers on 100 per cent mortgage need to be aware that stagnant house prices may keep them shackled to their uncompetitive lender and prisoners in their own home until house prices rise again.
There are many ways of paying for a new home.
There are also alternatives to buying such as renting or leasing.
But what most people still report as their ultimate goal, is to own their own home, and the most common way of getting started with this goal is to get a mortgage.
There are many different types of mortgage and remortgages but they all have one common feature, they are secured over your home.
This means that if you ever become unable to meet your repayments, your home can be seized by the bank who can then sell it in order to get back their principle.
When you're shopping around for a loan, there are certain terms you will need to be familiar with.
For example, mortgages generally come as either a fixed rate mortgage or a variable rate mortgage.
The fixed rate loan will keep the same interest rate and monthly repayment for the whole of the fixed rate period.
For loans that could be the life time of the loan.
This will generally be for a period of 5, 10 or 15 years.
If the rate is fixed for a period, such as the first 2 or perhaps 5 years, and then reverts to a variable rate it is known as an adjustable rate mortgage or ARM.
If you find that you are not offered a mortgage there are a number of things you can consider doing such as renting or leasing a home.
This should be easier to get approval for.
You may also consider saving up for a larger down payment.
This will also make approval more likely.
The main thing you should consider however, is working on fixing your ailing credit score by getting your debts under control and making your repayments on time.
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