There are a number of reasons why people may be categorised as having adverse credit, including; County Court Judgments, mortgage arrears, loan defaults, or bankruptcy. People who are in such a situation and who wish to buy property will most likely need to apply for adverse credit mortgages. Such borrowers are normally excluded from the high street mortgage market.
It is generally accepted that approximately one in four people in the UK have an adverse credit history. This means that the market for adverse credit mortgages is quite large. Because so many UK residents experience poor credit, a large number of lenders offer adverse credit mortgages to suit their needs.
Such lenders are usually contactable through an independent mortgage broker. There are so many adverse credit mortgages that it is difficult for an inexperienced individual to sift through the hundreds of products available at any one time and choose the one that is best suited to their situation. Independent mortgage brokers, however, have specialist software to help with the process. Experienced brokers should be able to offer advice for almost any credit situation imaginable.
Also, because independent mortgage brokers are not tied to particular lenders, they are able to offer unbiased advice on which adverse credit mortgages and lenders are best suited to your particular circumstances. If an applicant contacts a lender directly they will be restricted to applying for only the products that the lender offers. An independent broker can offer whole of market advice.
The terms and conditions of adverse credit mortgages can differ somewhat from products offered by high-street lenders to people with “clean credit.” Most notably, adverse credit mortgages usually contain higher interest rates and penalties for early repayments. However, the products must still be affordable, otherwise borrows would be forced to endure arrears, defaults, and possible repossession if they could not keep up with their mortgage payments.
Adverse credit mortgages are therefore competitive and the excess interest payable should not leave borrowers in financial distress if their situation does not change substantially from the time they applied for the loan. There is also a high level of competition between lenders in the adverse credit mortgage market meaning that bargains are regularly available for customers who require such products.
Despite the demand from borrowers and the competition from the lenders the adverse credit mortgage market is subject to the conditions of the economy as a whole and the financial markets. This means that this particular type of home loan product can be difficult to find if the credit markets experience a dry spell. While this can be frustrating, the market for mortgages for people with credit impairments is huge so any dry spells shouldn’t last too long.
Because of the complexity of the market people who suffer from adverse credit should not research the market alone and should not apply for a mortgage until they have received impartial advice. Applicants should therefore contact an independent mortgage broker to receive expert and impartial advice before applying for any number of adverse credit mortgages available today.