Browsing "Lending Guide"
In the years since the financial crisis, banks have restricted access to credit and cut rates for savers. Peer-to-peer sites are designed to bypass the banks and solve both of these problems at the same time.
What is Peer to Peer Lending/Investing?
Peer-to-peer sites act as an introducer – between borrowers looking for credit on the one hand, and savers or investors looking for better returns on the other. Once you take away the bank in the middle, both groups get better rates.
Obviously, peer-to-peer sites need to keep a tight control on where savers’ money goes. They do this by running stringent credit checks on borrowers. When a borrower is accepted, their case will be profiled by risk. This can give investors the ability to opt for high risk/ high return options or vice versa.
The sites do the administration and repayment legwork, taking a fee for their service.
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How much do you spend on milk every month? How much do you spend at the hairdressers? These are the sort of intrusive questions you could soon face when you apply for a mortgage.
Under new rules due to come into effect from tomorrow (26th April), lenders will be quizzing new mortgage applicants about their lifestyle and spending habits to determine whether or not whether they can afford a mortgage.
The changes, which form part of the Mortgage Market Review, are designed to put an end to high-risk lending and protect buyers from taking out loans that they might struggle to repay if their circumstances change.
What’s the Mortgage Market Review About?
In recent decades, loan decisions have been granted almost exclusively on the basis of an applicant’s income. But buyers with large expenses such as childcare fees or high commuting costs may face affordability problems that cannot be deduced from their income alone.
So lenders will now have to conduct interviews with new mortgage applicants to determine their income and expenditure in more detail.
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- Which regions are susceptible to bad credit?
- What puts people at risk of decline?
- Why is your credit record important?
- How can you improve your credit score?
We’ve all heard of the postcode lottery. But it seems that residents on our doorstep in Leicester are among the most likely to be rejected for their credit card or overdraft applications due to a poor credit score.
The ‘Mind the Credit Gap’ survey commissioned by Aqua, a provider of poor credit history cards, has determined that residents in the East Midlands are most at risk of rejection by lenders.
According to the survey, which asked participants questions that would help to constitute a credit report, almost two-thirds of people in the region (65%) are not expected to meet credit approval criteria.
The next most vulnerable areas are Wales and the North-West, where it is estimated that 63% would not meet creditors’ requirements.
Regions with more creditworthy residents include London, where 52% would apparently struggle to obtain credit, and Northern Ireland, the only region of the UK where the majority (albeit a small one) would expect to be successful in their application.
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