MoneyExpert: New Type Of Home Loan ‘may Grow In Popularity’

A new kind of homeowner loan designed for consumers with poor borrowing history could become increasingly popular in the UK, despite being more expensive than standard mortgages, it has been claimed.

Bad credit mortgages are aimed at people who have been rejected by major lenders due to missed repayments or CCJs.

The Council of Mortgage Lenders (CML) predicts that the popularity of these homeowner loans will rise in relation to the fact that many households are facing significant financial difficulty, sometimes through failing to compare loans and find the best rates.

“At any point in time there is a substantial minority of individuals who cannot access mainstream financial products,” states Bob Pannell, head of research and information at the CML.

“The provision of adverse credit products helps such individuals get into or sustain homeownership and in many cases gives borrowers an opportunity to re-order their finances.”

The CML is confident that bad credit mortgages will play a key “rehabilitating” role for those with short term financial problems.

With rising interest rates the number of homeowners remortgaging in the UK has dipped to its lowest level since 2001. CML figures show that remortgaging accounted for 30 per cent of the overall mortgage market in September 2006.

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