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Bad credit consumers losing thousands of pounds in deposits

The global credit crunch and the turmoil that has affected the UK's financial markets have started to really take effect over recent months.

A number of lenders have suffered as a result of the chaos and consumers have found it increasingly difficult to get finance as a result of lenders tightening their criteria and exercising increased stringency in their lending practices.

drowning in debtConsumers with bad credit have been hit particularly hard, with many lenders far less willing to take risks on borrowers that have damaged credit, and many lenders withdrawing a range of bad credit loan products from the market altogether.

Another recent reports has revealed that even those bad credit customers that thought they had secured a mortgage are no longer safe, and many could end up losing a fortune on any deposit that they have put down.

Convex, and online property conveyance company claims that many lenders that have offered mortgage loans to bad credit customers are now trying to pull out at the last minute between exchange and completion, shattering the home ownership dreams of the buyer and in many cases resulting in the buyer losing a lot of money in terms of their deposit. The company claims that some buyers have lost 10% deposits equating to thousands after their lenders pulled out.

One Convex official stated: 'Once the parties have exchanged, the buyer is legally obliged to buy the property or they will lose their deposit, which even on a modest property at current prices is likely to be more than £20,000, and may also face being sued for breach of contract. Now we are finding that although the lender does not technically withdraw the offer they come up with queries on the day before completion.'

Tom Smith
10th November 2007

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