The Almost Perfect Borrower

By Michael Challiner

It's easy enough to find a building society willing to finance your home if you're a prime buyer, with no CCJ's (County Court Judgments) against you and no arrears. Lenders are jostling to lend their money and you should have no problems at all.

What happens, though, if you're unfortunate enough to have fallen into the just less than perfect class of borrower? Just because you're not in this category, doesn't mean that you need to worry too much when you need to raise a mortgage. You can be classed as near prime by most lenders if you have CCJ's of under £1,000 and are totally up to date on your debt repayments. Many lenders realize that a would-be borrower may have overstretched themselves for a number of reasons, including late bill payment, maybe due to an expected bonus failing to materialize. One-off family problems or unexpected expenses can cause setbacks with the most organised and normally efficient and reliable borrowers and it shouldn't be the end of the world for your mortgage.

Whilst some lenders may be less than happy about near prime loans, it will certainly be a simple enough task to find an adviser who can find you the ideal lender. Interest rates may be slightly higher, which is understandable due to the slightly higher risk. Having got the mortgage, as long as repayments are paid on time, you should be able to transfer to a standard loan within about three years. Form the borrower's perspective, if the mortgage company considers you a higher risk, then you should perhaps consider that risk exposure for yourself.

By taking income protection insurance as an optional extra, you will be protected in the event of a loss of earnings through events such as illness or accident. The market in near prime mortgages is growing as lenders show more understanding and realize that one mistake is forgive-able and showing some degree of leniency can gain them valuable customers. There are increasing numbers of people who earn £30,000 plus per annum who are seeking advice from the Consumer Credit Counselling Service. Requests for help have risen over two and half times in only three years. Most of these people have a genuine desire to get back on track and are unlikely to get into trouble again.

Problems with more serious debts are increasing generally. Press and television coverage has been putting the spotlight on the UK's huge mountain of debt and obviously those with serious financial problems are classed as high risk by lenders. Bankruptcy is more and more commonplace. Although debts can be discharged after one year rather than three, bankruptcy is still a very serious issue, despite the advent of IVA, or Individual Voluntary Arrangement. An IVA is a formal agreement between an individual and his or her creditors where an arrangement to pay off debts on reduced payments can be made, employing one affordable monthly payment, normally over a period of five years. These arrangements are treated as a serious commitment and are not to be undertaken lightly.

With more and more lenders willing to help the near prime borrowers there is an increase in the number of products at increasingly competitive rates. An on-line broker is in a perfect position to search the market for you and come up with all the options. They have access to a wide range of mortgages and will be very happy to help, with a minimum of fuss and delay. Don't worry - sort it.

Please have a look at Michael Challiners great articles about mortgages, life insurance and lots of other financial matters. Mortgage articles.