Poor Credit Mortgages

Poor credit mortgages (sometimes referred to as adverse or bad credit mortgages, non-conforming, or sub-prime mortgages) are designed for those people who have, or have had, poor credit history and are considered too 'high risk' for a standard mortgage. Poor credit describes the situation where you have had problems repaying debt in the past and this has been recorded in your credit report. You may have been bankrupt, received a County Court Judgement (CCJ), fallen behind with previous mortgage repayments, or fallen into debt on your credit card, personal loan, or utility bills. If you are in this situation, mortgage lenders are less willing to offer you a mortgage, because there is an increased likelihood that you will be unable to repay your debt.

Due to the recent credit crunch in the UK, many lenders are withdrawing their poor credit mortgages because they can no longer afford to lend to customers who are considered more likely to fall into arrears. As a result, you may find that you are only able to obtain a poor credit mortgage through a specialised mortgage broker. Although you will be charged a fee for their services, you may be able to obtain a loan which would otherwise be unavailable to you.

Since lenders consider you more of a risk, poor credit mortgages have higher interest rates and will therefore cost you more. However, if you make all your repayments over a number of years, your credit rating will improve, which means that you may be able to remortgage and find a better, less expensive deal with another lender.