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MORE and more mortgage borrowers are taking out expensive adverse credit home loans when they could qualify for significantly cheaper deals, reports Moneynet.
The online financial data comparison site has seen a 20 per cent increase in the numbers of borrowers opting to take out mortgages offered by specialist brokers dealing with the ‘non-standard’ mortgage market.
“The increase in demand for adverse credit mortgages is undoubtedly a symptom of people overstretching themselves,” said Moneynet chief executive Richard Brown.
“And it is also a worry that adverse credit deals, which can be more profitable for lenders and brokers alike, are being promoted to borrowers who may be eligible for standard mortgage deals from High Street lenders.
In many cases, where the previous difficulties have been minor, i.e. minor arrears or small CCJ’s, a High Street lender can often be persuaded to lend at normal rates if the borrower’s case is presented properly.
But Brown warns that it may often be just a case of identifying the lenders that are ‘hungry’ for business to find the flexibility in lending policy - which means they will help customers they would otherwise have turned away.
“Whilst we believe that the adverse mortgage market is important and, for more serious cases, the only way that many people can borrow money to buy a house, the premiums being charged on the interest rate make these deals look unattractive when compared with the mainstream market.
“We are concerned that some borrowers are being pushed into these more expensive deals when they could be eligible for mainstream deals at normal rates.
“Our advice, except in extreme cases, would be to discuss the individual details with an independent broker with a view to establishing whether or not a deal can be struck at normal rates. Only when this avenue has been exhausted should a borrower look at the adverse mortgage deals at higher rates.”
Moneynet financial comparison is the UK’s longest establish ed online personal finance research and data analysts. The company offers consumers a choice of thousands of low cost financial services products. From mortgages, personal loans to motor, home and medical insurance, credit cards, savings accounts and best buy fixed rate products, Moneynet is one of the most comprehensive online services of its kind in the UK. Founded by chief executive Richard Brown, the Moneynet brand is destined to become one of the UK's major players in consumer finance products.
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