Non-conforming mortgages help credit ratings

Signing up to a non-conforming mortgage can help people improve their credit rating

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Friday, 19, Nov 2004 06:00

Research carried out by GMAC-RFC has found that a non-conforming mortgage - a mortgage designed for those with a bad credit history - can significantly help credit repair.

The research was carried out to better understand the non-conforming mortgage market. It found that a mortgage designed for people with bad credit could significantly improve their personal finance.

A total of one in three people who have this type of mortgage stated that their credit rating had improved since they took it out. A further 42 per cent of people said that their quality of life would be worse if they didn't own their own home.

GMAC-RFC's research also found that 57 per cent of people who had bad credit were quite happy to pay one or two per cent more to secure a mortgage than not to have one at all.

The research also exploded myths that surround the type of person who has bad credit.

Property values of homes with non-conforming mortgages were only slightly less than the national average - £138,000 compared to £162,000.

GMAC-REF also found that there is no heavy social disparity between those who have bad credit and those who don't. More than one in ten people with a non-conforming mortgage are in the top two social groups.