The credit crunch and my mortgage.

The onset of the credit crunch is making it ever more difficult to get a mortgage and you may have found that the credit score that you achieved last year does not lead to you instantly obtaining the best market rates this year.

To explain this you first need to understand the reasons affecting your attempts to get the best rates possible from the lenders in this sector. There are two main factors that that need to be taken into account. The first is the credit crunch itself and the second is to do with the methods used by the lenders when assessing your credit score.

The credit crunch is a situation that the mortgage markets around the world but particularly UK mortgage find themselves in. It is all about lenders not being able to raise the funds that they in turn lend to you. Lenders typically borrow money from the money markets in order to lend out to you the borrower. Due to the poor lending in the US the organisations that lend this money do not want to lend any more as the risk are currently to high.

It is not that the lenders cannot get the money but to do so they have to be far more rigorous in the vetting of their potential clients.This is one of the reasons behind your difficulty in obtaining a mortgage as easily as before and it is called credit scoring.

Using a computerised screening system, lenders will assess various aspects of a potential borrower's profile to see how reliable a borrower they will be. If you score high, you will be seen to be a sound investment and you will probably get the mortgage you want. If your score is low, however, you may be seen as a risky investment and will either not get the mortgage or will be granted it at a higher rate. This is also known as sub prime lending.

There are a lot of different ways in which your score is calculated, most of which you will not be told about as you may be seen to be able to manipulate the answers to your advantage. Having said that, there are tricks to making sure that your credit profile looks as healthy as possible. First of all, it is advantageous to have a stable address history. If your contact address has changed several times in the last 6 years, it can make you look financially unattractive.

Being on the electoral roll is also a plus. The fact that you have voted from the same location for several years gives lenders confidence that you have stayed put and therefore stable for a significant length of time. This will give you more points.

Though you may have a mobile phone, having a land line is another way to work the system to your advantage.It is also best to have a secure employment history so that the lender can see that you are not changing jobs every couple of weeks or months. Remember this is where the repayments on the loan are coming from and they like to know they will be repaid on a regular basis.

Most importantly it is imperitive to have credit in some shape or form and also to make sure that you don't miss any payments due. If the system does not detect credit then it has no basis to assess you on. But a healthy credit background with regular monthly repayments lets the lender know that you will be less of a liability as far as their money is concerned.

In conclusion, the best advise is to show your financial history in the best possible light and you should be able to get a mortgage just as you would have been able before the credit crunch. Always remember that it is a mortgage advisor's job to help you get the best out of your money, so never underestimate or overlook the professional help which they can offer you.

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