Bad credit homebuyers ‘will pay the price’

Would-be homebuyers in the UK have been warned that money lenders are likely to hike their repayment rates when dealing with someone who has a poor credit history, according to one financial expert.

Mike Pendergast, a spokesperson for Zen Financial Services, suggests that while consumers who are keen to borrow money will likely find a lender willing to offer them a loan, they can also expect to face a heavy debt management burden.

“With adverse credit, most lenders will have a range of products depending on the severity of the adverse credit,” explains Mr Pendergast.

“They generally refer to them as prime – being no adverse credit – light, medium and heavy depending on the severity and the [interest] rate will go up accordingly.”

The Zen Financial Services spokesperson went on to add that for mortgage borrowers who have a poor credit history, the underwriting process is often “a little less strict”.

Many UK mortgage borrowers have seen their debt management problems worsen in recent months in the wake of several increases in the base rate of interest.