A&L finds sub-prime mortgages can help damaged credit ratings

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A new survey from Alliance & Leicester Mortgages has shown that the vast majority of brokers believe a specialist mortgage is a good way out of a damaged credit profile.

In the questionnaire to mortgage brokers, it was found that the two biggest reasons for an individual to opt for a sub-prime or near-prime mortgage are if there are defaults on credit or debts, or if they have a poor credit rating.

This apparently is already well known by those with debt problems: 86 per cent of brokers said their clients understand that a specialist mortgage will help them to get onto the property ladder and rebuild their credit profile.

"It comes as no surprise that brokers are seeing an increase in the number of near-prime and sub-prime cases they are dealing with," says Mehrdad Yousefi, head of intermediary mortgages at Alliance & Leicester.

"It is encouraging to see that brokers say their clients know the value of these type of mortgages and that 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," he added.

The telephone survey was undertaken with a sample of 202 brokers.

The FSA, which has highlighted this area as a priority for supervision, describes sub-prime mortgages as "those which do not conform to standard or prime lending criteria and cater for customers with adverse credit histories".

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