Buying a house is a huge responsibility for many of us. No matter how many times we move houses, once we find the perfect home, we want to settle there with our families. The question of financing it in the most economical manner rises as a result.
Most of us will look for loans from banks, online lenders and mortgage brokers – both big and small. However, there is a significantly unconventional source from where you can take out a mortgage – credit unions.
What Are Credit Unions?
Credit unions are community savings and cooperatives where members pool in their savings and help provide loans to each other. A cooperative is essentially owned by and run for the benefit of the members of the organisation.
Credit unions can disburse loans at an interest of 3% per month (or 42.6% APR). They mainly provide savings and loan accounts, while larger credit unions like the London Plus Credit Union may provide more services such as payroll plus for partner companies and debit cards.
Like most others, the London Plus Credit Union also has a few key features –
- Their members must live and work in particular boroughs of London, and hence if you live in one of the areas where they operate, you are in luck.
- You can also be a member of London Plus Credit Union if you go to any of the churches in their operational area or are a member of the Unite Union who’s living and working in London.
- They are not for profit. The money that is made from the interest is used to reward members or improve their services.
- They are regulated by Prudential Regulatory Authority and the Financial Conduct Authority.
- The FSCS protection limit for members is £85,000.
Why Choose London Plus Credit Union For Your Mortgage?
London Plus Credit Union operates for the interest of its members. Their primary aim is to provide loans to members at low interest rates, encourage them to save and provide financial advice and assistance to members in need.
They operate intending to provide the best possible solution to their members and hence, will allow payday loans for bad credit if they are confident of your income. They also limit your loan amount based on your income, existing savings, and ability to pay back.
How Does A Mortgage From London Plus Credit Union Help?
Getting a mortgage from London Plus Credit Union is a great option for several reasons.
Easier Loan Approval
Credit unions are more likely to give payday loans for bad credit. Since they only lend to members, it is much easier to get loan approval. They are more likely to hold on to mortgages that they originate, unlike banks who might sell them to recover the money.
As a result of this, they are more flexible with their interest rates and who they provide their loans to.
They also operate for the benefit of their members and hence, the decisions that they make with respect to disbursing loans are for the benefit of the members, the community and the credit union membership as a whole.
Based on your membership and your prior account activity, you might even get pre-approved loans and other member benefits!
Lower Rates Of Interest
Credit unions are legally mandated to have low interest rates with the maximum being 3% per month in Britain. Since they are more focused on breaking even and not profiting, they are able to offer a lower rate of interest on loans and higher interest on the money deposited with them.
In fact, credit unions have some of the lowest interest rates among all banking institutions, including credit cards. And in case of a large loan, even the smallest bit of exemption works wonders.
Fewer Additional Fees
Banks and mortgage brokers are likely to charge you a number of extra fees while originating a mortgage such as closing costs, vendor fees, origination fees, insurance and other processing costs.
Owing to the fact that the London Plus Credit Union is operating from a position which is not concerned about profit, they demand fewer origination fees and processing costs. This saves you a tremendous amount of money!
One of the London Plus Credit Unions’ primary focuses is customer service. Unlike banks which are mostly looking at profits, they provide you with a better, more personalised approach to taking out a mortgage.
Moreover, since they are most likely to hold on to mortgages, you are likely to work with them for the entirety of your loan period. They might also give you extra benefits and options such as a no-down payment plan.
Roadblocks To Availing A Mortgage From London Plus Credit Union
While originating a mortgage from London Plus Credit Union might seem like the best-case scenario, there are a few reasons which might stop you from borrowing from them.
You Need To Be A Member
Like most credit unions, london plus credit union also only lends to members who live, work or visit churches in their area of operation. Without a valid membership or residence in one of these areas, you might not be able to originate a mortgage from them.
In this case, you might need to find a credit union that services your area of residence or place of employment.
London Plus Credit Union operates only in certain boroughs of London and hence, are limited in terms of geography. There might also be fewer opportunities to get in-person service at their branches.
Limited Service Options
The services available with them are significantly limited as compared to banks, and their technology could be less state-of-the-art than a bank. However, based on your requirement, you might well be satisfied with what is available at hand.
When you are ready to take out a mortgage, you must do your research across banks, credit unions and other financial institutions to determine what works best for you. In case your credit rating becomes a hindrance in this process, you can always ask a financial advisor for tips to elevate your score.