UK Mortgages : Adverse Credit Mortgages
Adverse Credit Mortgages
Adverse Credit Mortgages - If you asked a sailor to sail in adverse weather conditions you might not get a favourable reply, this is no different to mortgage lenders, adverse credit is the main reason people get refused mortgage applications as credit scoring is the main factor when lenders consider your request.
Adverse credit prospects
Having adverse credit may be a result of late payments or non payments which usually results in CCj's while this is frowned upon in the mortgage market some lenders have realised that adverse credit doesn't mean you are a bad or unwilling payer but may well have been ill or lost your job and in some cases you may be self-employed and have got into debt while your new business gets of the ground.
What is Adverse Credit ?
Adverse Credit is a term used when the borrower has a poor credit history. This could include previous mortgages and loan arrears, CCJ's* (county court judgments), bankruptcy or even just paying bills to late. Just because of fairly minor mistakes in the past mortgage applications are rejected.
If You have Adverse credit, No problem!
Most UK mortgage specialists offer suitable mortgages for people even if they have adverse credit.
Other terms used to describe an adverse credit mortgage include:
- Non status mortgage (Self Cert)
- Credit impaired mortgage
- Bad credit mortgage
- Poor credit mortgage
- No credit check mortgage
- No credit mortgage
- Low credit score mortgage
- Problem Mortgage
- Sub prime mortgage* - Non-conforming loans
*Over 3 million people in Britain have a County Court Judgment (CCJ) on their credit record. and approx 2 million people have had mortgage arrears at some stage in their past.*Sub-prime lending', aka 'Non-conforming' loans, refers to a loan or mortgage for borrowers who can't meet the standard income and credit history criteria set down by banks and mortgage lenders.
Such borrowers include
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Borrowers who are self-employed
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Borrowers who have a poor credit record.
Non-conforming loans are set with higher interest rates to reflect higher risk of the borrowers
Adverse credit history : Some causes could include:
- County Court Judgments (CCJ's)
- Mortgage or rent arrears
- Self employed - Although you can apply for a self certificate mortgage
- Decrees (Scotland)
- Bankruptcy
- I.V.A : Individual Voluntary Arrangement
- Trust deeds
Adverse credit is not the only reason you may have a mortgage application declined or rejected :
- You may have changed address many times
- If you are without 3 years worth of audited accounts.
Self-employed borrowers may have to use sub prime lenders but they may also apply for self-certificate (self-cert) mortgages, meaning You confirm how much you earn, and the lender does not need any references.
Advantages / Disadvantages of an adverse credit mortgage
Disadvantages
- A bank will have to take a big gamble if it is to give you an adverse mortgage, it needs to know it will get it's money back.
- Some lenders may provide you with a mortgage or remortgage but will raise their interest rates to reflect the risk they are taking.
Be prepared to pay higher interest rates on your mortgage.
Advantages
- You get your own home for one and if you repay you mortgage back as the lender required, after three years your credit history will improve.
- After three years you could even remortgage to one of high street lenders and benefit from savings on discounted interest rates.
Debt Consolidation
A debt consolidation loan may well be an alternative way to clear your adverse credit and make your mortgage application more attractive to providers although you may well be able to get a loan added onto your mortgage if you can find a generous lender
Adverse credit history
Information that is held by credit agencies you can find out this information for yourself.
Loans for adverse credit
As well as mortgages loans are available but interest rates are usually much higher than a conventional loan.
UK Adverse credit mortgage and impaired credit market
The UK is not short of brokers that will try and find a mortgage that considers your adverse credit.
Thinking of a mortgage? Try our Mortgage Calculator
UK Adverse Credit Mortgages Application
Adverse credit mortgages are designed to help people with a poor or adverse credit history, whether they have had mortgage arrears late payments, CCJ's or even if you have been declared bankrupt.Adverse credit mortgage Interest rates & Deposits
Interest rates will higher for adverse credit mortgages and it is more likely that you will need a higher deposit than with an unrestricted mortgage. 25%+ deposits are the "norm" when it comes to adverse credit mortgages.