Personal Loan Store Logo
UK Loan Comparisons

Bad credit mortgages – some of the problems that have arisen

Over recent months financial markets in the UK have been hit by turmoil. The United States saw a credit crunch that was sparked in the sub-prime sector, and this problem quickly spread to other countries reaching a global scale.

Like other countries, the finance markets in the UK have suffered as a result of these problems, and most sectors of the finance industry have taken a hit, including the mortgage sector.

Uk housesIn addition to the financial companies themselves suffering as a result of the widespread credit crunch consumers have also have to suffer, and none more so than those with bad credit. For the bad credit consumers that are now looking to get mortgages the outlook is relatively bleak, and the financial situation has resulted in decreased accessibility for these borrowers and increased stringency from wary lenders that want to avoid taking risks in the current volatile financial markets.

Mortgage lenders have been really reeling in their lending of late, particularly following the Northern Rock crisis. Mortgage lenders are now tightening their lending criteria, and are far more careful about who they are prepared to lend to. This has resulted in many mortgage lenders taking a high proportion of their bad credit mortgages off the market amidst fears of the risks involved and the chances of problems occurring on the same scale as they did in the sub-prime markets in the United States.

There are still mortgages available for those with bad credit, but many lenders that have kept on some of their bad credit mortgage deals have hiked up interest rates by huge amounts, and this means that consumers that are already struggling financially in many cases may be forced to pay even more for the prospect of home ownership, increasing the chances of falling behind with repayments and ultimately increasing the chances of getting repossessed relatively quickly as a result of this.

Another recent report has shown that not even bad credit customers that think they have secured a mortgage are safe these days. A number of lenders have been finding problems with these bad credit mortgages at the last minute, which has caused massive delays for the buyer despite the fact that they may have already exchanged contracts and are just waiting to complete. The lenders have then used the small print in the contract to get out of having to make the mortgage loan to the bad credit customers, and in some cases the customer has lost thousands of pounds that was paid by way of a deposit because they have been unable to complete.

These are just some of the problems that have arisen for bad credit consumers that are looking for finance, and things could get increasingly more difficult for those in the sub-prime market as the financial turmoil continues to take effect. Those with bad credit that wish to increase their chances of getting a mortgage in the current economic climate could fare better by seeking advice from an independent financial adviser or specialist bad credit mortgage broker, as these professionals tend to have established links with bad credit lenders and could increase your chances of getting a more affordable deal and could decrease your chances of getting rejected thus further damaging your credit.

Tom Smith
7th November 2007

Related articles:

  • Mortgage Terms: What is the Best Length?
    How long would you like you mortgage to run? The simple answer would be as quickly as possible, but not everyone can, which means higher repayments and more strain on the household budget.
  • Your Home Is At Risk If..
    “Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it”. Words that have to be printed on any promotional material for mortgages or home-owner secured loans. Is this the only reason you should keep paying your mortgage?
  • Paying Off Your Mortgage Early
    Twenty five years is the average period of a mortgage… Twenty five years is a long time! The dream of many people is to pay off their mortgage early. Can it be done?
  • The Dangers of Negative Equity
    The great thing about buying a property is that it’s a guaranteed investment, prices just keep going up, right? Wrong. We look at what happens when the bubble bursts and prices drop.

Recent News:

  • Surprising house price growth figures from Nationwide [07.11.07]
    Amidst speculation of falling house prices over the coming months the Nationwide Building Society has released figures that show house prices rose at their fastest pace in four months during the month of October.
  • Opt for an FSA regulated lender [04.11.07]
    When you are looking to take out a loan there are a number of things that you need to consider. Not only do you need to think about what type of loan to go for and how much you need to borrow but you also need to think about which lender to choose for your loan.
  • Consolidating your debts effectively [02.11.07]
    Many households in the UK have high levels of debt these days, and for many debt repayment can be a real struggle that involves juggling an array of repayments and stretching the budget in order to try and accommodate all of the repayments that have to be made each month.
  • Shared ownership could suit first time buyers [02.11.07]
    Over recent years first time buyers have been experiencing huge difficulties when it comes to getting onto the property ladder, with a number of factors making things increasingly difficult.
  • Car finance options [01.11.07]
    Anyone that owns or has owned an unreliable old vehicle will know how stressful, frustrating, and even dangerous it can be to have to rely on this type of vehicle.


Early Redemption Penalties - Loan Extras - Debt Consolidation Bad Credit - Choosing a Personal Loan - Loan Penalties - Money Saving Loan Tips - Loan Reviews
Site Map - About Us