When it comes to buying a home, some lenders can take on a rather sanctimonious attitude. They want to deal only with those who have faultless credit histories, perfect work records and adequate deposits. But money problems can affect everyone. Loan defaults, county court judgements or being previously bankrupt can cause adverse credit problems.
Sometimes people get into debt through no fault of their own and, even if they have been to blame, want to sort things out. Certainly no-one taking out a mortgage wants to see their property repossessed.
However, there is some good news in that some lenders are willing to provide adverse credit mortgages. Deals are unlikely to match standard mortgages; lenders in the adverse credit market will charge higher rates. This is sometimes described as ‘sub-prime’ or ‘non-conforming’
While the lenders clearly want to keep some degree of separation between their standard and adverse credit divisions, the deals they are offering are less punitive than in the past. Most lenders will also cut the interest rate if borrowers keep up a good payment record. And, after three years, it may be possible to switch to a standard mortgage.
The lender will set the interest rate based on how much of a risk you may pose. The application is thoroughly checked before the interest is set. You may also be subject to redemption penalties, but these should cease to apply after three years. A mortgage may not be available in all cases, but we’ll always try our best.