Default Mortgage Articles
If you are looking for a mortgage deal but you have a history which includes defaults on loan payments this section of the site might help. Here you will find links to our default mortgage articles which explain the things you should know before deciding on the type of mortgage that will suit you circumstances best.
Let’s start with the basics of a Default Mortgage
There are lots of circumstances that can lead to payment defaults and that’s why more people need default mortgages. Default mortgages are among the range of specialist mortgage products intended for people with adverse credit circumstances. It is sometimes difficult to know whether a particular mortgage lender offers default mortgages, as they may be called by many different names. Default mortgages may be called bad credit mortgages, bankruptcy mortgages, IVA mortgages, CCJ mortgages or simply sub prime mortgages.
Whatever they are called default mortgages make it possible for people with bad credit to get mortgages. It used to be the case that having bad credit put you beyond the pale for getting a mortgage, but with rising house prices and rising debt, that is no longer true. Britain is carrying more than a trillion pounds of consumer debt and many people now have defaults and need default mortgages*. In addition to this changing family circumstances make it more likely that people will need default mortgages, after relationship breakdown puts a strain on the finances.
Default mortgages are usually offered by specialist lenders, which means it can be hard to find them on the high street. However, there are dozens of lenders in this sector and more all the time, so borrowers have a lot of choice with default mortgages. When selecting default mortgages it is good to be aware of the interest rate, which usually starts a couple of percentage points higher than the standard mortgage rate from a high street lender.
The rates for default mortgages also increase with the number of adverse credit circumstances that a particular borrower has, which means that they could pay quite a premium for the privilege of having a mortgage. This could be worth it, as without default mortgages, those with adverse credit circumstances would not qualify for mortgages at all.
Default mortgage loans are available direct from lenders or through mortgage brokers. A broker may be the best option for borrowers dealing with a range of adverse credit circumstances. It doesn’t matter whether it’s arrears, defaults, County Court Judgements, individual voluntary arrangements – somewhere there are suitable lenders who provide default mortgages. In most cases, the application process is the same, though there are also self employed mortgages where proof of income is required in different formats.
One of the best things about default mortgages for the borrower is the opportunity they offer to clear debt through debt consolidation, which many remortgage customers use. It is also possible to use default mortgages to repair a shaky credit rating.
*Bank of England – 2004.