Market For Adverse Credit Mortgages Expands

With an increasing number of consumers in the UK experiencing difficulties with money the market for “non-conforming” mortgages is also on the rise. The number of mortgages tailored for people with credit rating problems has grown six times faster than the mainstream market in recent years say new figures.

The Council of Mortgage Lenders (CML) research showed that while just £1 billion was leant to people with county court judgements or other debt issues in 1996, this has now risen to £25 billion.

The number of deals open to those with credit rating problems has also vastly improved with a range of offers now rivalling the mainstream. Maximum loan-to-value ratios have also increased and the punitive fees applied to "non-conforming" mortgages have declined.

Much of this is down to increased competition in the market, with the 30 specialist providers now operating more than twice the number in 2000. The increased supply reflects growth in demand as personal debt increases and more people apply for county court judgements and bankruptcy.

A 'non-conforming' mortgage can also be called a 'sub-prime' or 'adverse credit' mortgage. These are mortgages specifically designed for people who do not qualify for a mainstream mortgage from lenders. They may be suitable in a variety of situations; for example, if you have had credit problems in the past or have difficulty proving a regular or reliable income.

Such situations are unfortunately increasingly common. Life changing events such as divorce, unemployment and sickness can sometimes cause you to miss making payments on your mortgage or other financial commitments. These things happen to many people at some stage in their lives, but once such problems are behind you, they should not stop you applying for a mortgage.

If you would like to know more about mortgages why not ask AnswerBank Business and Finance.