Credit where credit’s due

A recent report has shown a rise in adverse credit mortgages, but many borrowers could be eligible for cheaper mainstream deals

Moneynet, the online financial data comparison site, has seen a 20 per cent increase in the numbers of borrowers opting to take out mortgages offered by specialist brokers dealing with the ‘non standard’ mortgage market.

Richard Brown, Moneynet chief executive, said: “The increase on demand for adverse credit mortgages is undoubtedly a symptom of people overstretching themselves.

“And it is also a worry that adverse credit deals, which can be more profitable for lenders and brokers alike, are being promoted to borrowers who may be eligible for standard mortgage deals from High Street lenders.”

In many cases, where the previous difficulties have been minor, such as small CCJ’s or minor arrears, a High Street lender can often be persuaded to lend at normal rates if the borrower’s case is presented properly.

But Brown warns that it may often be just a case of identifying the lenders that are ‘hungry’ for business to find the flexibility in lending policy, which means they will help customers they would otherwise have turned away.

In an increasingly competitive market place mortgage lenders are continually offering new incentive deals to attract customers.

However, adverse credit can affect your ability to remortgage your home and take advantage of the savings to be made.

The process of trying to remortgage your home is very time-consuming and frustrating, but those with a poor credit rating are placed in a ‘high-risk’ category by mortgage lenders and as a result many applications may be turned down.

Bad credit remortgage deals are much more widely available now than ever before as lenders in the UK have developed more flexible products based on people’s lifestyles.

While your credit status is probably the most significant factor in determining what kind of mortgage rate is available to you, many lenders are now taking a more flexible stance on who they lend to.

A number of companies now specialise in offering adverse credit remortgages.

This essentially would mean that you can reduce your monthly outgoings and pay off other debts to improve your credit rating.

Other benefits include the ability to release equity in your property to help pay off debts and the option to consolidate all your existing debts into one monthly payment.