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Adverse Credit Mortgage Guide - Part 2
<< Back to Adverse Credit Mortgage Guide Part 1
In the previous article 'Bad Credit Mortgage Guide - Part 1', we took a look at what is meant by a bad credit mortgage or an adverse credit mortgage, what a sub prime lender does and how they differ from you normal high street lender. In this part we will look at how bad credit may be brought about and what circumstances may cause someone to have adverse credit.
There are a multitude of reasons why someone will suffer from bad credit and why they may want a bad credit mortgage, as we mentioned in part 1, there are plenty of specialist or sub prime mortgage lenders with 1000's of mortgage products to choose from with plenty of mortgage brokers willing and able to give sound advice. Any mortgage broker who has spent any time dealing with adverse credit mortgage applications will be familiar with the circumstances that can cause someone to incur a poor credit rating, in order to be complete within this guide, we thought we should list the main reasons we come across as to why people end up with impaired credit - you will see from the descriptions the majority of cases are due to no fault of the potential borrower and arise due to circumstances out of their control.
So How does someone with good credit end up with bad credit?
In no particular order:
Redundancy or drop in salary
We see this more then we would like to, people are sometimes forced to take redundancy or a reduced salary which obviously means less money to be spent on essentials, for many people this can mean they are no longer to service existing debts and as such miss payments which, if not rectified will lead to defaults, CCJ's etc. A number of the people we speak to have already taken the initiative and put new, reduced payment arrangements in place but usually after they have been through the mill and had adverse credit registered on their credit file which effectively means the damage has already been done.
Death or major illness in the family
Obviously when something like this happens, the most focused of people can easily take their eye of the ball and miss payments etc.
Separation or divorce
This is probably one of the more common reasons for incurring bad credit, when going through a separation the bills and general commitments can suffer.
Self employment
When people start out being self employed, it is often the case that they are unable to sustain normal credit commitments until their business venture has reached a level which can sustain both family life and business growth.
People simply take on too much debt
People can sometimes simply take on too much debt, whilst this seems like its always the fault of the borrower for not restricting their borrowing, in some cases the debts were able to be serviced prior to something else happening (sometimes one of the other reasons listed above) which, then makes the debt none manageable and as such, it can be said that too much debt had been taken on.
Or you could be classed as a 'non-standard credit risk' - according to Datamonitor, the independent market analyst, a minimum one in five adults in the UK are said to be non-standard. They may include people who are self employed, are unable to provide sufficient proof of income or people who have bad debt listed on their credit file such as missed payments, defaults or CCJ's etc or have had their homes repossessed for non-payment of mortgage or possibly some other form of bad credit.
The above lists, whilst not exhaustive would pretty much cover the main reasons people have credit problems. Looking at it a little deeper such as the individual types of bad credit (missed payments, CCJ's etc) would take away from what we are trying to do here, the point is that whilst peoples situations may be similar, no two situations will ever be the same. Each person will have his or her own set of individual circumstances which will dictate how they should go about applying for an adverse credit mortgage and what sort of mortgage product would be best for them
If you would like to know if you would qualify for a bad credit mortgage simply fill in the form at the top of this page and we will call you back.
