More than three-quarters of intermediaries said their clients were aware that an impaired credit history can cause problems with getting a prime mortgage and even more said their clients understood a near-prime or non-conforming mortgage deal would enable them to get on the property ladder and help rebuild their credit profile.
The research also revealed the top two reasons why clients opt for a non-conforming or near-prime mortgage. 66 per cent said it was because they had defaults on debts, hire purchase or credit card payments, while 32 per cent said it was due to a poor credit rating.
According to 42 per cent of brokers, consumers most likely to need a near-prime or non-conforming mortgage were low paid, basic rate tax payers. Another 39 per cent of brokers said it was most likely to be the self-employed who have an erratic income.
Mehrdad Yousefi, head of intermediary mortgages at Alliance & Leicester, said: “This market is becoming increasingly competitive with more lenders offering specialised mortgages. It is encouraging to see brokers reporting that their clients know the value of these type of mortgages. It is a good way of getting potential buyers on the housing ladder while enabling them to repair their credit history by maintaining regular payments on their financial commitments.”
Commenting on the findings, Chris Morgan, director at Compass Independent Financial Advisers, said: “I’m sure the non-conforming mortgage market will grow as the level of debt people have continues to grow. These products are good for people penalised by bad credit. If they can keep their mortgage straight for two or three years, a lot of providers will put clients onto a normal status product mortgage.”
