Sub prime mortgages and you

Are you sub prime?

It's actually the mortgage, not the borrower, that is sub prime. Borrowers, particularly anyone with a large amount of unsecured debt, may however be categorised as "vulnerable".

"If you answer yes to any one of the following statements you are a 'special' or sub prime customer," says David Titmuss:

• You are currently having problems paying your bills on time.
• You have missed payments on ANY credit agreements in the past three years.
• You signed an agreement in partnership with someone else who has missed payments - common with divorced and separated people.
• You forgot payments on a small credit agreement such as a mobile phone.
• You have defaulted on a repayment for anything, ever.
• You consistently run an overdraft which incurs bank charges.
• You want to borrow more than you would normally be allowed, given your income or circumstances.
• You have County Court Judgments against you.


• You have been made bankrupt or are in an Individual Voluntary Arrangement (IVA).
• You are in a debt-management programme.

Sure about your mortgage choices? Call Moneyextra for independent, unbiased mortgage advice.

"Before Northern Rock and the so-called credit crunch, people could find a mortgage even if they were severe defaulters. Those days are over, and many people will be shocked when they apply for a loan or mortgage and are either given a higher-than-expected interest rate, or even declined. And these can be people who are apparently safe and sound, Mr and Mrs Average, living a very Middle England life in a semi in nondescript suburbia," says David Titmuss.

What to do if you think you're in the sub prime category

First, check your credit report. Many borrowers who assume that they are sub prime find that they can be placed on mainstream mortgages if their case has sufficient merit. It is for this reason that it is important to use a good independent mortgage broker or adviser who does not just specialise in sub prime mortgages; it is often worth trying with some of the more lenient mainstream lenders first.

"It is time to get on the phone to someone and really discuss the best solution," says Titmuss. "Mainstream lenders put mortgage and loan applicants under intense scrutiny, and are turning away more and more prospective customers primarily because their systems are set either by computer or hyper-sensitive management. With most lenders nowadays it's a case of 'computer says no', so the trick is, don't talk to the computer."

Is your credit record correct? Find out with CreditExpert from Experian.

The outlook over the next six to nine months is not good for the bottom end of the sub prime market. Many lenders have withdrawn "heavy adverse" ranges for high loans-to-value across the board. Many will now lend no more than 75%, so, if you have the sort of mortgage that reflects previous credit problems, it is vital that, this year, your priority is to pay off as much mortgage as you can.