As the UK Economy Worsens, Bad Credit Loans Look Better than Conventional Ones
As the UK economic outlook continues to worsen, bad credit loans offer a viable alternative to conventional forms of credit, explains Andy Hygate from www.loansbadcredit.org.uk
London, England (PRWEB) May 19, 2009 -- As the UK economic outlook continues to worsen, bad credit loans offer a viable alternative to conventional forms of credit, explains Andy Hygate from www.loansbadcredit.org.uk
New reports from the BBC, the Telegraph, and the Guardian indicate that the financial crisis is far from over. Despite moves to rescue big banks and lower prevailing interest rates, the adverse economic impact continues to trickle down from the top and have a devastating effect upon average borrowers and home buyers throughout the UK.
| | - The affordable MyChoice HomeBuy program sponsored by the Homes and Communities Agency, for example, attracted an overwhelming number of applications. First time home buyers who enroll and qualify get their choice of properties, while a housing association assumes responsibility for as much as 50 percent of the cost of the home.
- But unfortunately the unexpected and abrupt withdrawal of funds from the program has caused many pending transactions to fall apart. Families who were celebrating upcoming moves into wonderful new homes were left with nothing but frustration and disappointment, despite the fact that they have already spent money on property surveys.
- The nation's biggest housing association, Metropolitan Home Ownership, had 15,000 applications. But many of those applicants have now been turned away because the allocated funds ran out months ago. The British government set aside £126m for 2009, but delays in getting the funds dispersed to housing associations have created turmoil.
- Buyers were promised homes, but housing associations have no cash to pay for them. Although HCA representatives say that the remaining funds will soon reach housing associations, they also report that the amount of money that was allocated will not be sufficient to cover all applications. Only those whose applications have been finalized will get to buy the homes they have been looking forward to owning, and others will not.
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Meanwhile the market for bad credit loans - those loans that intentionally cater to people with blemished credit - continues to grow. More people are using these less stringent and easier to get loans for bad credit simply because traditional loans have become harder to qualify for and much more expensive.
| | - Many of the best mainstream loans for those who find it difficult to get conventional credit are being eliminated. Self-certification loans, for example - which are well suited for people who are self-employed or who freelance - may soon be completely banned.
- That's because the Financial Services Authority blames much of the mortgage and housing crisis on these loans. People who applied for them were not properly evaluated, and many inflated their salaries to obtain bigger loans in a trend of widespread abuse.
- But even as loan choices grow smaller, a new study reports that an overall lack of mortgages due to credit restrictions and other problems threatens to widen the gap between the rich and the poor. Lack of credit means even fewer opportunities at the lower end of the economic spectrum
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Lenders are requiring larger down payments, higher transaction fees, and better credit. That is one of the reasons that the number of remortgage loans has fallen about 20 percent, because lenders are now requiring much larger deposits and homeowners have too little home equity to qualify for a remortgage. With the economy in tatters most homeowners have blemished credit and little or no cash savings to draw upon for a down payment. That leaves them unable to qualify for a conventional loan at a time when they need emergency cash more than ever.
In the midst of the crisis there is still hope, however, as many Brits are discovering the advantages of bad credit loans. These loans are specifically designed for people with bad credit, so in tough economic times like these they are a bespoke solution to the loan problems of those borrowers who have damaged credit, a recent bankruptcy, or delinquent credit card or mortgage payments on their credit report.
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