UK Adverse Credit Mortgage
A UK Adverse Credit Mortgage is designed for those people who have poor credit ratings or debt problems. One of the main advantages of a UK adverse credit mortgage is that you can borrow to purchase property even with a poor credit rating, or debt problems including County Court Judgment (CCJ) and loan default issues.
The financial industry recognises that people sometimes get into financial problems at some stage, through no fault of their own, such as a divorce. There are a number of mortgage lenders who will lend money even when the borrower has a poor credit rating
Most people with adverse credit problems fall into the category of ' light adverse ' (missed the odd loan payment or had one CCJ awarded against them) or ' heavy adverse ' ( missed many loan payments, with different loan companies, and with possibly multiple CCJ's awarded against them).
Of course there is a price to pay for a UK adverse credit mortgage. People who have debt problems either currently, or in the recent past, are regarded as higher risk and so are charged more than for a non-adverse case. This will be either by higher interest rates or more expensive arrangement fees, or both.
In the current economic climate, it is becoming more difficult to find mortgages for people with adverse credit issues. All lending banks are having liquidity problems which result in less money being available for lending. What money is available is being steered towards the least risky customers - those with no debt problems or only very light debt problems. It also means that at the moment interest rates for UK adverse credit mortgages are running well ahead of the Bank of England interest rate.
This will disadvantage those people who currently have debt problems but in reality the lending criteria now being imposed is no more stringent than that being used in the mortgage market 20 years ago, before the adverse credit mortgage market really came into being.
As gloomy as all this might sound if you have debt problems, it is still possible to help many people who do not have extreme debt issues, but it is no longer as easy or as cheap to obtain a UK adverse credit mortgages as it was in 2006 / 07.
Benefits of a UK Adverse Credit Mortgage
The main benefit of a UK adverse credit mortgage is that even if you have debt problems or have had them in the recent past you can still obtain a mortgage to purchase your home.
Having a poor credit rating need not be a permanent thing. If you can continue to pay off your adverse credit mortgage and any other debts, with no further problems you can rebuild your credit rating. The very fact that you are able to maintain payments on your new UK adverse credit mortgage will help you to rebuild a healthier credit rating. After a few years of 'clean' payment history, you should be able to re-mortgage your property using a more favourable deal and eventually be considered a non-adverse case.
Risks of a UK Adverse Credit Mortgage
The cost of a UK adverse credit mortgage will generally be higher than the equivalent non-adverse mortgage because you represent a higher risk to the lender. You must be able to maintain your mortgage payments and be committed to controlling and reducing your other debt levels, especially unsecured debt such as credit card expenditure.
When interest rates rise all mortgage borrowers suffer, but UK adverse credit mortgage borrowers will feel the strain first since they often pay higher interest rates to start with.
For further advice and to talk to a mortgage adviser about arranging a UK Adverse Credit Mortgage just click on the enquiry button below, fill in brief details, and an adviser will call you within the next 24 hours.
