Just because you suffer from adverse credit, it does not mean that you will automatically need to use the services of a mortgage broker who will charge a large fee when helping you apply for an adverse credit mortgage.
Although the fees targeted at adverse credit mortgage applicants are normally high when compared to applicants with clean credit, some brokers choose to not take advantage of the situation and do not charge excessive fees to their adverse credit clients.
Mortgage brokers have been known to charge up to 5% as a brokerage fee for adverse credit mortgage applications simply because the client has a poor credit history and will have little choice but to accept whatever mortgage they can get.
Such mortgage brokers justify their excessive fees by suggesting that it is more difficult and time consuming to source and process an adverse credit mortgage application than it is for a clean credit mortgage. This is not necessarily true, and buyers should be aware of this.
Although there is some extra work involved when a client has adverse credit, it is probably not enough to justify such a large increase in fees, which usually ranges from 0% to 1% for clean credit mortgage applications.
In addition to excess client fees, many adverse credit mortgage products provide large procuration fees to mortgage brokers for successful applications.
This may be due to the high level of competition in the adverse credit mortgage field. Mortgage brokers may tend to favor lenders who pay the highest procuration fees despite the fact that they are likely to ignore this factor and focus solely on the client's needs.
By combining the increase in client fees with the large procuration fees that can be earned on successful adverse credit mortgage applications, it is clear to see that this type of mortgage is lucrative for mortgage brokers.
If you suffer from adverse credit, it may be necessary for you to employ the services of a mortgage broker to help you find an adverse credit mortgage to suit your needs.
Be aware, however, that it may not be necessary to pay excess fees in order to secure such a mortgage. Although most mortgage brokers will charge excess fees for adverse credit mortgage applications, some will not, so it pays to shop around.