Why Have Lenders Closed Shop On Heavy Adverse Mortgages?

You can’t find heavy adverse mortgages because lenders have had to stop lending them. Many lenders who previously lent these types of deals have had to close their doors for the time being. The credit crunch has meant there is no money for mortgages that carry risk, so the lenders have had to close shop. It is hard and it has been unexpected but there is no getting round the fact that there are very few, if any, heavy adverse mortgages on the market.

The credit crunch did exactly what it sounds like - it crunched the credit in the world to make it a lot less easy to get hold of, so heavy adverse mortgages became non-existent. And to fund mortgages, to actually get the money that goes into the borrowers’ bank accounts lenders need to borrow money themselves - but no one will lend for heavy adverse mortgages.

And to borrow mortgage money for heavy adverse mortgages lenders need to give the other banks a risk rating of your loan. In the past this has always been low as credit was so cheap and so much money was changing hands. But now it is very high, and high risk means no credit and no credit means no heavy adverse mortgages.

So what can you do if you have previously had to rely on heavy adverse mortgages? You have several options - but none of them are easy. Firstly, you may find that you are not necessarily reliant on heavy adverse mortgages any more. Maybe you have kept your nose clean for a while or maybe you have had a change of circumstances. You may have worked so hard that lenders are willing to take off the heavy adverse label and give you a much lighter adverse or even near prime label. This means you do not need to search in vain for heavy adverse mortgages, rather shop for much more bountiful mortgages.

But maybe you will have to wait and see. Staying with your existing heavy adverse mortgages might be expensive, as you will resort to the lenders’ standard variable rates, which are not competitive at all. But it is better than no mortgage at all. And when things improve, and they will improve in maybe one or two years, you can be sure that with a bit of good advice you will be able to find heavy adverse mortgages to suit your needs.

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