Life After Debt; You Can Get a Mortgage

Around one quarter of us could be turned down because of past problems, such as arrears on rent or a previous mortgage, or county court judgments for unpaid debts.

But that needn't be the end of the story. There are companies offering specially-designed "non-standard" mortgage deals.

Chelsea Building Society's Prospect mortgage range offers four deals intended for applicants who have experienced genuine hardship.

Chelsea's Darren Stevens says: "We wanted to take away any stigma.

"Our customers haven't done anything wrong - they are just ordinary people who have run into the sort of bad luck that could happen to anyone, like a family break-up or illness."

With these non-standard mortgages, the higher the risk the lender thinks it is taking, the higher your mortgage rate.

Prospect's schemes are stepped according to the customer's missed rent or mortgage payments or unsatisfied court judgments.

SCHEME 1 is for people who have had no missed rent or mortgage payments for two years, and have only one or two county court judgments (CCJs).

Chelsea will lend up to 90 per cent of the property's value at its standard variable rate (SVR), currently 7.24 per cent. If you have an average mortgage of pounds 60,000 on an interest-only basis, that means monthly payments of pounds 362.

SCHEME 2 is for those who have had no missed payments for the past year and have four CCJs or fewer against them. Then Chelsea can lend up to 85 per cent of the value of the property at half a per cent over SVR.

SCHEME 3 is for those who have missed up to three payments in the past 12 months, with up to six CCJs. It offers a rate of 1 per cent above SVR on up to 80 per cent of the value.

SCHEME 4 is aimed at those who missed up to six payments in the past 12 months, with up to eight CCJs. It offers a rate of 1.5 per cent above SVR on up to 75 per cent of the property's value. On a pounds 60,000 interest-only mortgage, you'd pay pounds 437 a month.

You must stick with the scheme for five years or pay back 3 per cent of the mortgage balance. But after two years, payments on all four schemes revert to Chelsea's normal SVR.

Bristol & West has two good deals, available on up to 75 per cent of the property's value. The Restart SVR Plus offers their SVR plus 0.6 per cent for the first year, then reverts to the SVR for two fur ther years. Customers who switch deals during the first three years will pay redemption penalties.

Restart Stepped SVR Plus is a two- year deal: SVR plus 0.4 per cent in the first year, then SVR plus 0.2 per cent in the second. There are penalties for switching during this period.

Other Bristol and West deals available only through mortgage brokers accept unlimited CCJs up to pounds 10,000 and unlimited rent arrears, providing that neither situation has got worse in the past six months.

Among specialist lenders, the Kensington Mortgage Company is a leader, providing deals "for people who don't fit the mould".

KMC has nine deals for people who have had a variety of past problems including bankruptcy and any number of CCJs or missed payments.

The rates vary from SVR plus 2 per cent to SVR plus 4 per cent, depending on your situation and how much you want to borrow.

This can be up to 90 per cent of the value of the property if you are buying, and up to 80 per cent if you are remortgaging. Their SVR is currently 7.25 per cent.

You will be expected to stay on this deal for three years or pay a hefty penalty of 5 per cent in the first year, 4 per cent in the second and 3 per cent in the third. But there are no penalties once those three years are up.

KMC's Philippa Drew says: "People who have had problems in the past should look on our mortgages as what we call a credit repair exercise. After making three years' payments, their credit will be fully repaired, and they will be totally free to look around for a cheaper deal."

CONTACTS: Chelsea Building Society, 0800 291 291; Bristol and West, 0845 300 8000; Independent Mortgage Collection, 0800 731 0137; KMC, 0808 100 4200.

WE WERE TRAPPED

THE Blezard family are counting their blessings after finding their way out of a financial nightmare.

"It all started when I became ill and had to have a couple of major operations," says Hilary, 42, who is mum to Stuart, 21, Keeley, 18 and John, 11.

"We had a loan with a double-glazing company which was difficult to keep up when I wasn't working. In the end they got a county court judgment against us."

Last year, the family wanted to move from their noisy estate to a quieter area, but couldn't get a mortgage until they'd repaid the debt.

Then they heard about the Kensington Mortgage Company and rang them. Hilary says: "We filled in forms and it went ahead very smoothly. It was a huge relief."

Hilary and husband John, 37, moved to their new house on the edge of Croydon in Surrey in November. They pay pounds 580 a month on their pounds 96,000 mortgage.

Source: The Mirror