The Adverse credit market is estimated to be worth at least £25bn with the market growing all the time due to unprecendeted levels of borrowing in the UK
Many people wishing to get a mortgage may have a history of bad credit. This could involve
- Missing credit card payments.
- Missing monthly mortgage payments
- Going overdrawn (unauthorised) at banks and building societies.
- Previous declaration of bankruptcy or criminal charges resulting from missed payments.
Note adverse credit is not the same as being in debt. Adverse credit results from missing debt repayments.
Although it is more difficult to get a mortgage and also remortgage with an adverse credit history it is still quite possible. In fact many mortgage agents specialise in adverse credit mortgages. Generally speaking they will charge a premium interest rate to cover themselves from the increased risk of lending to those with bad credit history. They may also require you to take out mortgage indemnity payments. This is an insurance you pay so if you default the lender gets compensated by the insurance company.
Although this can act as a disincentive to get a mortgage you should remember the adverse credit mortgages shouldn’t be too unaffordable. Due to increased competition relative interest rates have been coming down closer to standard mortgages. Also it is always worth remembering that getting a mortgage is usually a better long term investment than renting a house.