Bad Credit

Do You Need An Adverse Credit Mortgage

As with any mortgage range, there are various different permutations of the same principle operating within the adverse credit mortgage market. For example, a lender is likely to take a very different view of someone with one minor CCJ (credit court judgement) that is now settled, compared with someone with ongoing difficulties or who is in the process of arranging an individual voluntary arrangement. In fact, in a society where debts are incredibly common, many high street lenders will simply overlook minor adverse credit situations. For this reason, it is often worth speaking directly to a mortgage advisor at your high street bank to see whether or not your situation actually warrants a specialist mortgage at all.

Carry out a credit check!
One of the first things that any potential borrower should do is to carry out their own credit check. A credit report can be obtained online, by post or over the phone from companies such as Experian, Equifax and Callcredit and costs around £2 for a basic guide of your credit rating, as well as any issues that are causing your credit rating to be poorer than you would expect.

Not only is doing your own credit check a good idea to ensure that you apply for the most appropriate type of mortgage, but it also gives you the opportunity to deal with any inaccurate information that may be negatively affecting your rating.

Where can I obtain an adverse mortgage?
For those with minor debt, it is often possible to obtain a mortgage from a traditional lender. Some of the most popular mortgage providers for those with minor debt include the following: Britannia Building Society, Chelsea Building Society, First National (part of GE), Mansfield Building Society, the Post Office and the Principality Building Society.

Those who have larger debt issues may have to look at the sub-prime market in more detail. There are now several lenders that specialise in offering an adverse credit mortgage quote, but these generally come at a higher cost and if it is possible either to wait until you can use a traditional lender or until you can improve your financial position, this could save you thousands in the long run.

With difficult circumstances, it is wise to seek advice from an independent financial advisor or broker who has specific knowledge of the adverse credit market. They can also assist with your general financial situation and make sure that you are in a position to deal with your ongoing financial issues.

This is particularly important as many borrowers who are in financial difficulty will often see a mortgage or re-mortgage as a good way of consolidating debts such as credit cards which are at a higher interest rate. Whilst this is true to a certain extent, credit cards are unsecured debt, so although they are more expensive to service, defaulting on this type of debt will not place your home at risk. By comparison, defaulting on a mortgage which is a secured debt can result in the loss of your home and should, therefore, not be undertaken lightly.

Credit Repair Loans
In the current financial climate some lenders are offering products known as credit repair loans. For this type of product, you have to pay a higher interest rate than you would with a conventional mortgage and also put down a relatively large deposit. However, if you are able to keep up your repayments for a sufficient period, usually around three years, your credit history should have improved sufficiently to enable you to remortgage with a more mainstream deal at a more competitive rate of interest.