Adverse Credit Mortgage - the Facts

By: IC

If you need an adverse credit mortgage, then you should do your research and find out the facts before you commit to anything.

Regardless of the state of your credit history, armed with a bit of patience and a good understanding of lender criteria you should be able to get a mortgage. An adverse credit mortgage isn't that hard to get, but unless you do your homework and shop around or take some professional advice, its unlikely you will get the best deal. Some lenders can charge extraordinarily high interest rates for an adverse credit mortgage, or attach severe restrictions and penalties. If you need a mortgage and you already have financial problems, you must ensure that you do your research and speak to an adverse credit expert to ensure you get the best product for your needs.

Adverse Credit Mortgage Explained
An adverse credit mortgage is a product that has been specially designed to help people with poor credit problems get on the property ladder, or refinance an existing property to pay off other debts. The adverse credit mortgage market has grown over recent years, mainly due to the increase in people who have a bad credit history. It is estimated that one in four people in the UK would be declined a standard mortgage because of their bad debt record. Some of the high street mortgage lenders, together with new specialist and niche companies, have designed products that are targeted specifically at this market, which means that anyone hoping to get a mortgage of this type has plenty of choice.

What are the differences between an adverse credit mortgage and a standard residential mortgage?
In essence, an adverse credit mortgage is quite similar to a standard residential mortgage. The lender will provide you with a loan for an agreed amount of money, which you repay to them at an agreed interest rate. You can choose from schemes where the interest rate is fixed for a period of time (fixed rate), or a tracker where it can vary in line with the Bank of England base rate. The main difference with an adverse mortgage is that the interest rates may be slightly higher than normal and there may be restrictions on how much money you have to pay and how often. When you choose an adverse credit mortgage, you need to be absolutely sure that you can meet the required terms; if you can show that you are making regular payments as agreed with the lender, it could help your credit rating and allow you to remortgage after a couple of years at a more favorable rate.

How do I find out which adverse credit mortgage is right for me?
Even people who are researching standard residential mortgages can get confused by the myriad of different products available. Although the adverse credit mortgage market is considerably smaller than the general mortgage market, it can still seem pretty complicated to the layman. That's why it is a good idea to seek expert advice. An adverse credit mortgage broker will have a comprehensive knowledge of all the products on the market, access to the latest schemes and deals via computer systems linked to lenders and will be able to analyze your exact circumstances to see which products might suit you best. Not only do they have the expertise and technology to find the right products, they can also assist you in completing application forms and help to sort out any difficulties that you may encounter throughout the process.

How do I know if I need an adverse credit mortgage?
Take a look at your credit history. If you have extensive credit card debts, had a County Court Judgment (CCJ) against you, have been declared bankrupt or have had a mortgage application declined, you should ask about an adverse credit mortgage.

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