What credit references do lenders use?
Bank Statements and credit searches.
What does a credit search do?
Shows defaults, CCJ’s and bankruptcies.
What is a default?
Where the lender issues a default where a borrower has missed payments - Shows on file for 6 years.
What is a payday loan?
Indicates inability to manage their finances. Doesn’t always show on the credit check.
What is a Guarantor?
Someone who makes a contractual commitment to be responsible for repayment of a loan where the borrower defaults.
What is a full guarantee?
Guarantor is liable for the full debt.
What is a limited guarantee?
Guarantor is only liable for a percentage of the debt.
What makes a Guarantor invalid?
- Lack of capacity
- Undue influence/pressure
- Misrepresentation
- Misapprehension
- Mistake
- Duress
What is Joint Borrower, Sole Proprietor?
Property is purchased in sol name but both incomes are used for affordability.
What is a CCJ?
Happens after defaults where the court make a judgement and this remains in force until repaid. On credit file for 6 years.
What is Insolvency?
An undischarged bankruptcy that lasts for 1 year and you can’t borrow more than £500. Can’t apply for a mortgage.
What is a Bankruptcy?
Someone in financial ruin and potential loss of family home.
What is an IVA?
Where you enter an agreement to reschedule debts over a period of time. High risk but can get a mortgage.
What is a Debt Relief Order?
Designed to help those in England who are struggling to pay their debts,
What is the criteria to meet a Debt Relief Order?
- Owe a max £30,000
- Total gross assets don’t exceed £2,000
- Disposable income is no more than £75
What is Fraud?
An attempt to obtain funds by dishonest means and the fraud act 06 allows for prosecution.
What does mortgage fraud include?
- Incorrect application data
- False references
- Omission of certain outgoings
- Debts not disclosed
- False valuations
How long is ID retained for in terms of Anti-Money laundering?
5 years.
What is most important in terms of Mortgage suitability?
Must recommend the most suitable mortgage for the applicants circumstances.
What is important in relation to mortgage term?
A mortgage should be arranged over the shortest practical term.
What must be in place for an Interest-Only mortgage?
Must have a credible repayment strategy.
What is Repayment Risk?
Someone low risk who makes payments and uses capital repayment.
What is a Fixed rate risk?
Where those in fixed rates can’t benefit from falling rates.
