Adverse Remortgage Definitions Explained
If you're looking for an adverse remortgage you may already have looked into your credit report. That would be a sensible move to make, so you can see exactly what lenders will see when you apply for an adverse remortgage. In addition to your name and address and whether you are on the electoral roll, there is a lot of other information on your credit report that will affect the success of your application for an adverse remortgage. If you have ever applied for a loan, credit card, store card, car finance or other finance deal, then details will be on your credit record. These details will affect how your application is scored by an adverse remortgage lender. It is not a question of a blacklist, but of whether your credit report matches the lending criteria of the particular bad credit lender.
If you look into the information that is available online for adverse credit remortgage products, there are a lot of terms that may not be familiar and this article aims to explain some of those. To start with, there are non conforming borrowers. These can be borrowers who need to borrow mortgages that are out of the norm. Non-conforming products include buy to let, Sharia home purchase schemes and lifetime mortgages. However, this sector also includes mortgages for people with bad credit, whether this is because of a chequered financial history, illness, unemployment or other causes.
In the main, adverse remortgage lenders will expect applicants to have a combination of arrears on loans or rent, defaults on loans or rent, County Court Judgements, individual voluntary arrangements (IVAs) and bankruptcy orders. It is the number of these and how they have been satisfied that will determine which category a particular adverse remortgage applicant falls into.
CML Adverse Credit Research
Research from the Council of Mortgage Lenders (CML) divides borrowers for an adverse mortgage or remortgage into three areas in terms of risk:low adverse,medium adverse and high adverse. (Some lenders terms these light adverse, medium adverse and heavy adverse, though 
there may be other descriptions as well.) According to the CML, applicants for an adverse remortgage with a low adverse rating would have no bankruptcy orders or IVAs, CCJs of between £500 and £2,000 and between three and six months of arrears on loan payments.
If applying for an adverse remortgage with CCJs of between £2,000 and £5,000, arrears of between six and 12 months and no IVAs or bankruptcy orders, then that would count as medium adverse. In contrast, heavy adverse for an adverse remortgage applicant would involve CCJs of over £5,000, arrears of more than a year and any IVA or bankruptcy order.*
With most adverse remortgage lenders only IVAs, CCJs and bankruptcies in the last three years and which have not been satisfied are considered adverse credit. For arrears, the qualifying period is two years. Most lenders use the most serious circumstances to determine what level of adverse credit a borrower has and what interest rate loading will be applied to the adverse remortgage.
* Council of Mortgage Lenders Regulated Mortgage Survey - Author Head of Research Bob Pannell - Nov 06.
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