When I first started as a Mortgage Adviser ten years ago, I specialised in Sub-Prime Mortgages, or Adverse Credit Mortgages.
What’s an Adverse Credit Mortgage?
Sometimes throughout our life, we have unexpected financial events, whether it is temporary unexpected bills, marital problems, health problems, redundancy or business problems. If we haven’t taken the proper precautions, such as sensible budget-planning or protection then we might be facing an adverse financial effect which can be anything from a missed payment to a default, CCJ or even an IVA or Bankruptcy.
The main lenders were not keen on accepting this kind of client and often the client had to go to an alternative (sub-prime) lender. These lenders were often more expensive than the main lenders, but gave the client a breathing space to get their financial affairs in order before they could then look at going back to a more mainstream lender.
Often the sub-prime lenders would allow them to be mixed with Self-Certification Mortgages (where a client did not need to supply any form of income proof), and it became easy for the more unscrupulous to abuse the system.
Naturally after the credit-crunch, these lenders disappeared and the mainstream lenders became even stricter with their lending criteria.
According to the Council of Mortgage Lenders & Bank of England, 6% of all mortgage applications are declined due to adverse credit.
According to The Money Charity in June 2015,
- 2,330 CCJs were issued every day!
- 231 people a day are declared insolvent or bankrupt. This is equivalent to one person every 6 minutes 13 seconds.
- Citizens Advice Bureau in England and Wales dealt with 6,323 new debt problems every working day during the year ending March 2015.
That’s a lot of people with a lot of problems.
As time passes and people start to rebuild their lives these events can cause problems if they need a mortgage in the future.
Luckily there are now options available. There are a few specialist lenders that will consider credit-impaired applications. Often they will want to know what has happened and why it has happened. They’ll also want to make sure that the customer is in an improving situation, and that lending to them will assist this, rather than causing more problems. I am pleased to say that there are lenders that will consider people with historic missed payments, defaults, CCJs, and even discharged bankrupts.
That’s not a guarantee that I can get you a mortgage, but being a specialist in this field I know who to approach and the best way to get the best deal for the customer.
I can’t help everyone, but there’s a lot I can help.
Feel free to contact me, and we can start the process.
We’ll go through a full fact-find, including a look at your credit file and income. This will then help us to find the right lender for you, whether it’s a mainstream lender or a more specialist lender. I can then discuss the case with the particular lender, to make sure you fit the lender’s criteria and I can then manage the application right through to completion.
Then, we need to talk about how to make sure that this event doesn’t ever happen again, by making sure that you have all of the protection that you require.
These events are more common that you’d imagine, there is hope out there and things do improve.