What is an adverse credit mortgage ?

An adverse credit mortgage is also known by the following names:

• Non conforming mortgage
• Bad credit mortgage
• Sub prime mortgage
• Non standard mortgage
• Poor credit mortgage
• Credit impaired mortgage

As you can see there are many different names for it. For the purposes of this page it will be refered to as an adverse credit mortgage because that is the term most people use to describe it.

Do you need to apply for a mortgage via sub prime lenders ?

Adverse credit mortgages are for people who have an adverse credit history. An adverse credit history could include:

• County Court Judgements (CCJ's)
• Mortgage or rent arrears
• Repossession
• Bankruptcy
• I.V.A
  

Mortgage lenders may also turn you down if you have changed address many times or if you are an entrepreneur without 3 years worth of audited accounts. Self-employed borrowers may have to apply for a self-certified mortgage, meaning they declare their earnings without having a set guaranteed salary.

As with any product, if there is a demand then supply will follow, and as the demand for adverse credit mortgages has risen, so too has the number of lenders catering for this need, and there are many sub prime lenders across the UK and also some mainstream lenders who consider lending to people with an adverse credit history.

Pro's and con's of an adverse credit mortgage

Lending money is all about risk. A bank will weigh up the risk factor of lending money to an individual and decide whether they are likely to get their money back with interest without too much hassle. Therefore some lenders will simply not lend to high-risk category borrowers, others will but will adjust their interest rates accordingly. This means you may have to pay higher interest rates on your mortgage. On the positive side you get a home to live in that belongs to you, and if you repay your mortgage back as required by the lender, after a period of time your credit history may have benefited considerably.

Right to buy

Right to buy mortgages are for use by public housing tenants who wish to purchase their property under the Right To Buy Scheme. Public housing tenants are people who rent their property from the local council, a non-charitable housing association or a housing action trust. The vast majority of Right To Buy sales are of local authority properties.

The Right to Buy scheme was first introduced in 1980, with the main aim of offering everyone the opportunity to own a decent home and so promote social cohesion, well being and self-dependence.

The Right To Buy scheme enables tenants to buy their homes at a discount price, provided that they have been living in their home for a period of time and meet the other qualification criteria. The RTB scheme is open to virtually any secure tenant who can afford to buy with the exception of dwellings occupied in connection with their employment and housing specially provided for the elderly and (in certain cases) the disabled.