Advice on Adverse Credit Mortgage
- The Financial Services Authority (FSA) regulates all lenders and financial services companies in the United Kingdom. See Resources for a link to its mortgage guide. Starting with the FSA is recommended as the overseeing body not only offers advice when seeking an adverse credit mortgage, it also offers recommendations for FSA-approved lenders. Mortgage financing can be a risky proposition if a borrower is a candidate for adverse credit lending--some lenders take advantage of poor credit history to charge unethical fees and rates. The FSA can also help you determine if you will qualify for adverse credit lending.
- Most adverse credit mortgage lenders are brokers. These folks work as intermediaries between the consumer and the financing company. The best way to find these brokers is through referrals. Begin with the FSA to find approved lenders and then work through your friends, family, professional, and personal circles. Having credit problems is fairly common. Ask for recommendations from those who've sought and acquired adverse credit mortgages. Do research at the Office of Fair Trading--the British equivalent of the U.S. Better Business Bureau (see Resources). This department has information on lenders and brokers and will raise red flags for any unethical or unfair practices.
- Acquiring an adverse credit mortgage can be a first step to repairing credit problems. Consider consolidating bad debts, unpaid debts, and outstanding loans in an adverse credit mortgage. If at all possible, avoid adjustable rates on mortgages as these can become problematic when the rates adjust. The goal is to make on-time payments on an adverse mortgage for at least 24 months--in the hope that after that period of time, your credit will have improved to the point where you can refinance into a conventional (or repayment) mortgage.