Non Standard Mortgages

What are Non-Standard mortgages?

A mainstream mortgage lender would reject 25% of Britons if they applied today. This is due to the standard criteria that lenders apply and many people's inability to meet them. There was a time when you would not be able to do anything about this, but nowadays, if a mainstream lender rejects you, there is help for you.

There are currently about a dozen non-standard mortgage lenders in the UK, more commonly called 'sub-prime' mortgage lenders. These deal with individual cases, and whilst some are standalone companies, others are actually owned by mainstream banks and building societies, but as separate companies as the business they take is more risky. These companies offer viable alternative for non-standard mortgage applicants and cover a range of borrower types.

Should you be self-employed, have a imperfect credit history or simply have out of the ordinary requirements you may fall into the non-standard category. Should you have not had a bank account or have lived at many addresses you may not be wanted as a customer by mainstream lenders. However, even if you consider yourself as no risk at all of defaulting on your payments, all non-standard mortgage borrowers are considered higher risk, which is matched by the higher rates you'd have to pay on your mortgages. But that doesn't mean you are stuck on these punitive rates for the rest of your mortgage life. One of the reasons why the rates are so high is that non-standard mortgage lenders know that once you have been with them for over 3 years and have kept up your mortgage payments, you will be considered as having cleaned up your credit history. This means that you can go and get a better deal on the mainstream market.

Sometimes, though, non-standard mortgage lenders provide slap a redemption penalty on their products which will penalise you for leaving before a certain period (usually after 3 years, and could be up to 7,10 years or even for the life) of the loan. These products should be avoided like the plague, unless you have absolutely no choice.

Before you go for a non-standard mortgage, you really should try every other option. Should you not be able to get a mortgage from a bank, you should go to the mainstream building societies. Should the big building societies not be able to help you, you should try small regional building societies, who may take your business. After that, turn to an independent mortgage advisor, who will search the market on your behalf to see if you can avoid the non-standard route. Also, don't forget your own bank manager. If you have been with them for a long time, they may be prepared to help you out.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

© AskFinancially.com 2009

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