Adverse Credit Mortgages & Personal Debt


If you would like us to contact you regarding adverse credit mortgages then please fill out the enquiry form below:



Adverse Credit Mortgages & Personal Debt


Personal debt and poor credit ratings are very common in modern times and lenders have varied their attitude to mortgage applications over recent years. Before the 1990ís the cost of adverse credit mortgages was high and the fees associated with them was high too. Before the credit crunch the market grew and since the credit crunch lenders are reticent about lending to people with poor credit histories.


What causes adverse credit?
There are a number of sets of circumstances that will put you into the category of having adverse credit mortgages:


An adverse credit history might be due to a situation from some years previously and because most people donít check their history regularly they have no idea even that they have poor credit. Failed financial applications also weaken credit ratings.


Who needs Adverse Credit Mortgages?
Each lender has slightly different conditions that defines adverse credit and whether they will accept an application. Some lenders will consider someone with a minor CCJ that is settled whereas most will not consider someone with extensive ongoing debt problems. Now that bad credit is an increasingly prevalent situation many lenders will discuss individual situations before making a decision and in some cases you may not need an adverse credit mortgage at all.


Carry out a credit check!
It is a good idea to do your own credit check whether or not you believe you have a poor credit rating. If there are issues they will be highlighted and may be able to be dealt with before going any further. You will also be better placed to select the right type of mortgage if you know your credit score.


A credit report can be obtained online, by post or over the phone from companies such as Experian or Callcredit and costs around £2 for a basic guide of your credit rating.


Where can I obtain an adverse credit mortgage?
If you have minor debt then it is usually possible to get a traditional mortgage with any lender. However for those with more significant debt there are specialist lenders to whom you can apply.


The adverse credit market is a specialist market and it is best to get advice from an independent financial adviser or broker who specialises in adverse credit mortgages. In some situations these advisers may also be able to help with your existing financial situation.


While in many cases it is tempting to take out a mortgage with the intention of consolidating all your existing debt and reducing the amount of outgoings it is worth remembering that a mortgage is a secured loan. Most debt will be unsecured and while the payments are usually higher than for a mortgage there is no risk of losing your home if you default, with a mortgage that is a possibility.


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.


Considerations When Taking Adverse Credit Mortgages


Adverse credit mortgages always cost more than traditional mortgages because they reward the lender for taking a risk on someone with financial problems. The interest payments are usually higher and there may be higher arrangement fees. The fees, rates and amounts payable should always be clearly documented and available. In 2004 the Financial Services Authority started regulating the mortgage market and as a result many of the more unfair aspects of the adverse credit mortgage market were cut away.


If you are getting advice from an independent financial adviser or mortgage broker it is worth checking how they are paid, they will be paid by the lender but they may also charge you a broker fee.


Adverse credit mortgages should be considered to be a short-term arrangement. After a certain amount of time, if you have kept up payments, your credit rating will be significantly better and it will be time to consider a more traditional mortgage. The sooner you can switch mortgages the more money you will be able to save with a more cost-effective mortgage.




Buy to let mortgages are not typically regulated by the FSA


Commercial Mortgages and Buy to let mortgages are not typically regulated by the FSA


We do not charge a fee for mortgage advice. A fee based option is available of typically 2% of the mortgage amount.
For example on a loan of £25,000 the fee would be £500

Contact Us | Terms & Conditions | Privacy Statement | Sitemap