COUNCIL of MORTGAGE
Council of Mortgage Lenders
Adverse credit mortgages
What is a 'non-conforming', 'sub prime' or 'adverse credit' mortgage?
These are mortgages specifically designed for people who do not qualify for a mainstream
mortgage from lenders. They may be suitable in a variety of situations – for example, if you have
had credit problems in the past or have difficulty proving a regular or reliable income.
Such situations are unfortunately increasingly common. Life-changing events such as divorce,
unemployment and sickness can sometimes cause you to miss making payments on your mortgage
or other financial commitments. These things happen to many people at some stage in their lives,
but once such problems are behind you, they should not stop you applying for a mortgage.
Lenders and brokers who sell mortgages are regulated by the Financial Services Authority (FSA).
This means that they have to follow comprehensive rules on how mortgage advice and information
is provided. This also gives you important protection as a customer, including access to an
independent redress scheme (the Financial Ombudsman Service) if you have a valid complaint
about how your mortgage is sold or administered.
This leaflet is designed to give you information on adverse credit mortgages, and give answers to
some common questions. It specifically concentrates on 'adverse credit' mortgages for people who
have had financial difficulties in the past.
What should you think about before taking out an adverse credit mortgage?
There are a number of things you should consider before taking out any mortgage. The FSA has a
helpful leaflet 'Choosing a mortgage – taking the right steps' which explains how to shop around
and understand what you are getting. You should read that leaflet as well as this one.
You should be aware that you are likely to have to pay a higher rate of interest for an adverse credit
mortgage than for a mainstream one.
Who can you get an adverse