Life after the credit crunch?

Use a specialist mortgage or secured loan broker to get the best deal on

Interest only mortgages

Traditional lenders serve a very important role in the British and Canadian economy. Self Cert and borrowing against Semi commercial property is quite recent.  Nevertheless, when it comes to a business secured loan or remortgage or secured loan, there are many reasons that small to percentage of business owners should not always use a traditional highstreet bank or highstreet building society, they should use a broker.  Most businesses and individuals would be best suited to interest only mortgages.

There are not just one or two major reasons to obtain a small to moderate business secured loan from another source. As you will see below, there are over a dozen compelling reasons to consider a source other than a traditional bank or building society for a small to moderate business secured loan. For most small to moderate business owners, five to ten of these reasons are likely to be applicable to them.  Borrowing is now far more difficult since the credit crunch.

Mr and Mrs Thompson owned their own home.  Mr Thompson had a good but stressful job working for a local IT company.  Mrs Thompson was on long-term sickness benefits.  After 3 years of being at their current home, some bad luck with repairs and renovation work that was necessary Mr Thompson had some quite large balances across 4 credit cards.  The house became more and more of a struggle.  One day, after some pipes split the Thompson’s discovered that the house had a serious structural problem and required underpinning, and the works were not covered by Mr Thompson’s buildings insurance.

They were unsure of what to do.  Did they re mortgage interest only?  Get a large secured loan?  They had lots of options as they didn’t have any bad credit history, defaults or CCJ’s.  A week later Mr Thompson found out that one of the IT companies major clients could be going bust, and they owed his employer quite a lot of money, and were about to be put on stop.  He could smell a redundancy package as he had worked for them for over 9 years.  He knew his company had just take on a rather large commercial remortgage of the office and had a much larger set of monthly outgoings, not just in their mortgage, but in an increased interest rate for the higher loan to value.  His company did have some new business involved with a video website but he wasn't sure that that would generate much revenue for them.  He also knew all about the creditcrunch.

Even though Mr Thompson was in debt, he could think of a way to make the best of a bad situation.  He went home to his wife and discussed their financial position.  They could re mortgage their problematic house or get a big secured loan and that would just cover their unsecured credit commitments and the repairs to their house.  If they re mortgaged instead of getting a secured loan they could borrow the money on an interest only basis, that would mean that the extra money they had borrowed they wouldn't need to pay back, just pay the interest.

Their monthly outgoings would be lower as the debt they had taken on against their house would still be smaller that the other loans and minimums on credit cards.  The debt would be paid back over a longer term.  Mr Thompson still had good credit history so he could apply for some very competitive lending products including mortgages with rates around the bank of england base rate, or sometimes lower if he was willing to pay a big fee.

 Bad credit loans

As Mr Thompson still had a good credit report, he could get a good mortgage or secured loan quite easily.   He could Self Cert his income as his income at the time was not quite enough.

He had though of a better way though.  He got a big secured loan on his house, soaking up all the equity and getting all his money out of his house.  He didn’t pay off his credit cards; he just kept the money ready in his bank.

6 weeks later he was made redundant and got a £11500 redundancy package.  He got all the money out of his bank as stopped paying his mortgage, his loans and his credit cards.  He even stopped paying the council tax bill.  He reckoned that the foolish lenders that had lent him money against his ruined house could take the hit for the losses, and he would go bankrupt.

He found a buy to let landlord with quite a lot of buy to let property.  With some of the cash from his redundancy package, and the loan on his house he paid up 18 months rent in advance on a house that was much nicer than his.  The land lord usually did credit checks on his prospective tenants to make sure they had a good credit history, but in his case as he was paying so much rent in advance the But to Let landlord did not care.  He no longer had to worry about buildings insurance, repairs, contents insurance or all the other property owner responsibilities.  The buy to let landlord used his lump of cash he had paid in advance as a deposit for another house, so the lump of money was very useful to him.  The buy to let landlord managed to get a 90% mortgage for his new residential property.  The landlord could not find a lender to give him a 95% mortgage for buy to let, just on his own house.

For the first 6 months the landlord did a deal with Mrs Thompson so her benefits could get some of the rent paid using the housing benefits scheme run by the local council.

Mr Thompson setup a small business in his wife’s name, doing IT support, got a contract mobile phone, a car on car finance and all the other credit agreements he had before went in his wife’s name.  He didn't care about the credit crunch and all the sub prime borrowing problems in the USA and the UK as he was sorted.  All his debts were gone - in the bin, gone for good.

He even went to buy a small office to meet clients in his wife’s name with a self cert commercial property mortgage.  The self cert commercial mortgage was great for his wife, as she had very little provable income.

After a year, Mr Thompson was a discharged bankrupt and had a clean sheet, and a load of his old council tax bill had gone in the bin too which gave him great satisfaction. 

He saw his old house in a local property auction after it had been repossessed and it was sold for just over half of what the borrowing he had on it!  The lender lost a stack of money, money that he still had under his bed!

In the rented house, they had a nicer place, a lot more disposable income, minimal responsibilities, and the rent was less than their old mortgage was, and the house was much nicer in a better location.

The buy to let land lord had difficulty later on re financing his buy to let portfolio as after the credit crunch and all the sub-prime lending in the UK, lenders were cranking up fees and tightening their criterior for lending.