Mortgage Under 25000

pixiefairydust75

We have a mortgage due for renewal and i'm finding it hard to get a fixed rate mortgage as ours is only £18,000.
The other set back is that in the 5 years we have paid our mortgage direct debit on time but last March the bank didn't receive and cash the cheque in time and so now we have a bad credit history. I have a letter from the bank to state it was only missed by a day and was paid at a later date.
Anyone have an idea where to go from here?

holly_hobby

I don't think 1 late payment in 5 yrs, with a letter of explanation from the lender should hinder you too much - not withstanding it was within the last 12 mths (as long as your credit status is otherwise prestine & your LTV low'ish).

Loans under 25k, are regulated under the CCA74, which is why most mortgage lenders won't initially lend this amount on a new mortgage. The easy way round it subject to income, and LTV, would be to effect the mortgage for 25k, choose a penalty free deal, and then when the mortgage completes, immediately repay the extra 7k you don't require. This will get you round the min 25k loan issue,although initially your application will involve an element of equity release to reach the 25k threshold -so thats to be considered.

Of course, the sensible way to address this, is to source a lender whom doesn't have the min 25k requirement in the first place - there are a few in the market.

Accordingly, I would stongly suggest you spend an hour or 2 with a whole of market broker, whom will not only source the most suitable lender and product for you, in respect of the above, but will also guide and support you throughtout the whole application process and beyond if required.

Hope this helps

Holly

hcb42

can you not just stay with current provider, is their interest rate uncompetitive? For that small amount of mortgage, it will be difficult to see any real gains, unless the rate is silly.

magpiecottage

A regulated mortgage (i.e. one secured on a residential property at least 40% occupied by the borrower) is subject to the Financial Services and Markets Act (since 31 October 2004) not the Consumer Credit Act so that should not make any difference.

However, the cost of arranging a new loan is likely to be disproportionately high for a loan of £18K so I agree with hcb42.

You could speak to a broker but expect to pay for their time one way or another.

dimbo61

Have a look at offset mortgages and once you have borrowed say £25K then clear your existing mortgage and then put the extra £7K into the offset account

holly_hobby

Indeed MC ..

As stated, generally loans under 25k are regulated by the CCA - which is why lenders did like to refrain from lending under this amount, due to the various regulations pertaining to them. Subsequent to the FSMA - despite any regulatory changes, many have taken the decision to retain the same minimum loan amount - hence why the OP has found it a little difficult to source a suitable provider - although it certainly is not impossible, just a little more leg work involved (which is why I believe the involvement of a broker would be beneficial to the circumstances) .

Holly x