From the subprime to the ridiculous

If you've got a less than perfect credit record and are looking for a mortgage, you could find yourself carrying the unfortunate tag of 'sub-prime borrower'. The term sub-prime encompasses five or six different severities from 'near-prime' to 'heavy sub-prime' and the borrower, will generally be charged accordingly.

Heavy sub-prime, for example, might apply to a borrower who has been a discharged bankrupt, has an IVA Individual Voluntary Arrangement or a high number of county court judgements CCJs against them. Someone who may have missed a couple of mortgage or loan payments in the past will often be sold a 'near prime' mortgage.

But, increasingly - as debt increases and lenders try to keep their 'mortgage books' as clean as possible - more borrowers are being forced into a sub-prime category who don't need to be there.

READ MORE: The true cost of sub-prime mortgages

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2007-07-13 16:39:14 © Moneyextra.com