The opportunities for high risk borrowers to take out a mortgage are increasing, according to new research from the Joseph Rowntree Foundation.
The social policy research charity found that there has been an increase in the number of lenders offering secured loans and mortgages to people with credit problems.
Known in the USA as 'sub-prime' lending, the charity found that this kind of lending is filling a definite market gap, offering credit repair and a fresh start for those with poor credit histories through debt consolidation.
However, the charity warns that sub-prime lending carries a greater risk for the borrower, often with very high interest rates and charges, and with some sub-prime lenders more ready than others to use repossession against late payments.
Additional loans on a property, known as 'second charge lending', is also to be treated with caution, the Foundation asserts, as it remains outside the framework of Financial Services Authority (FSA) regulation. Click here to find out more about adverse credit mortgages.
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