Near Or Sub-Prime Lenders In The UK Guide 2024

Have you stopped to think about whether you really need a bad credit mortgage, remortgage, credit card builder or any other financial product designed for people with a real adverse credit history? The PwC estimate the market size of the Near Prime credit sector to be between 10 million and 14 million people.

subprime vs near-prime lending

What does Near Prime mean?

It’s on the edge of becoming considered as having bad credit, but not quite that you do. When your credit files show mild negative entries like a single missed payment over two years ago, or you haven’t updated your address resulting in inconsistencies, you could be automatically classed as a higher risk by mainstream lenders using automatic review processes that reject your applications based on even the slightest of negative entries on your credit reports.

This report by New Day digging deep into the Near Prime credit sector reveals that the majority of people are unaware that because they’re being considered as a Near Prime consumers, they’re paying more for energy services, broadband bills and even the mobile phone tariff your provider offers you costs more because you’re not quite the right fit for them. They’d rather see some slight improvements to your credit files in order to give you the same services for less.

A report in 2021 pointed out “the annual cost of having a poor credit score for a middle-income household was £1,870”. It begs the question…

Not sure whether you have near or sub-prime credit and are interested in a loan, mortgage or remortgage? We can help, so please get in touch today without obligation.


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Do you have bad credit?

If you really need finance from an adverse credit specialist lender your credit reports should read rather badly. Like you take a look at it and think, what was I thinking? A £10,000 joint secured loan left to go into default while I kept the payments up on the TV subscription service? Ouch, a CCJ… or worse – when will that bankruptcy entry drop from this?

Those are examples of an adverse credit history that would require a specialist bad credit provider for any credit application.

Near Prime, borrowers don’t have any severe entries on their credit files. It is a minor issue, such as address inconsistencies, one payment missed over three years ago, and sometimes there have been no missed payments in the past few years. However, your credit is still considered subpar because it might be thinner than what’s considered normal. There’s just something either there or not there that’s worrying lenders.

When you turn the age of 18 years old, your credit file begins from scratch. With zero credit history, you don’t have anything to show you’re neither a good nor a bad borrower, so instead, you’re in the middle ground. Large banks and building societies edge on the side of caution and reject applicants with thin credit files.  On the other side of the coin, adverse credit finance products come at a higher cost because you’re considered to be a higher risk, and that’s often due to those earlier rejections.

The only way around that is to access your credit reports to find out if you are in the Near Prime category, or if you really do need finance from an adverse credit specialist lender.

sub prime financing

How to know if you’re a Near Prime Borrower

The PWC break down the near-prime market into three categories:

  1. Existing borrowers paying interest rates above 29.9% on credit cards and other loans. If you’re paying in the region of 29.9% to 39.9% for a credit card interest rate, or other type of finance, you’re a Near Prime borrower.
  2. Borrowers with characteristics of a Near Prime borrower. This category is representative of millions and it’s only because of a small amount of missed payments (often fewer than two), inaccurate or inconsistent address details on your credit report, or just having a thin credit file in general, perhaps never having obtained any credit in the past.
  3. The borrower who perceives themselves to be Near Prime, without actually knowing. The findings in the report published by New Day showed that 38% of near prime borrowers believed that if they only missed one single payment, they had bad credit and therefore couldn’t ever approach a mainstream lender again for any finance. This isn’t the case as things drop off and you can correct inaccuracies and work to improve your credit score, or you might find there’s no issue at all.

If you fall within the first two categories, you’re a Near Prime borrower and not quite in the ballpark of having a poor credit score. Your credit score is fair, or fair to good but just short of good.

In that situation, you’re going to find that mainstream lenders may reject your applications. If that has happened, hold off applying for any other loan for six months to let your credit files remain inactive for a bit, then approach things asking for a soft check on your credit file before applying for finance.

In the event that you are going to need a specialist lender for any sort of large finance, it is advised that you ask for advice from an independent broker or advisor so you can explain that you don’t have bad credit entries, but you do have an issue (or a few) with your credit files as despite being good with your finances, your credit files don’t reflect that.

Advisors are aware that everyone’s situation is different. You may be a high-risk borrower or you may be down on your luck that it looks that way on your files but in reality, there’s nothing wrong.

Specialist lenders don’t just cater to people with bad credit. Personal circumstances are taken into account and reflected in any provisional offers. Just because you had a rejection once, doesn’t equate to you having a bad credit history. It’s just considered that it’s not quite the right fit for the majority of lenders and requires a tailored approach when arranging any secured finance.

UK Sub Prime Lenders for 2024

Some of the best UK subprime lenders are high street names, but with different terms, if you are looking for Stockton-on-Tees houses for sale under 100000 you still could get a loan for between 5 and 6% with a free valuation.

Subprime Lenders In The UK Crisis

In the subprime mortgage crisis that began in 2007, specific subprime lenders in the UK were identified as part of the problem. In March 2013, there was a call to ensure that a new body should regulate subprime lenders in the country identified as ‘high risk’ firms so they can’t cause economic problems.

The subprime lenders in the UK who were identified as being part of the subprime mortgage crisis included: Cashplus, Provident Financial and Esure Group.

Cashplus was blacklisted by credit reference agency Transunion. It is known for its high-interest rates on loans to subprime borrowers – it charges 300%. Those subprime borrowers include customers who other subprime lenders have rejected. The subprime lender in the UK, which saw its shares rise 22% after a merger with another subprime firm, is to be investigated by the Financial Conduct Authority (FCA).

Provident Financial was investigated by the FCA and had been accused of trapping subprime borrowers into spiralling debt. The subprime lender in the UK, which was given a £35m loan by Lloyds Banking Group and launched a 459% APR subprime loan, has been forced to withdraw it after criticism from the Archbishop of Canterbury and the Archbishop of Westminster.

Esure Group is one subprime lender that agreed to write off subprime loans for up to £12m. Esure stated that subprime lenders didn’t have a sustainable business model, and it anticipated weak subprime lending markets in the near future.

Related Reading:

Navigating Subprime Mortgage Lenders in the UK

Subprime lending has long held a significant position in the UK’s financial services sector, catering to a subset of the population with less than perfect credit histories. The subprime mortgage uk market exists to assist borrowers who don’t meet standard banking criteria, essentially those with sub-prime credit profiles. By delving deeper into this arena, we can uncover the nuances of sub prime lenders uk and the list of specialist mortgage lenders uk that cater to such financial requirements.

1. What Does Subprime Mean?

Before progressing, it’s essential to define subprime for clarity. In essence, subprime refers to the credit quality of particular borrowers who have flawed or limited credit histories. This term extends to various financial products, such as subprime credit card, subprime loans, and the broader subprime mortgage landscape.

2. Subprime vs. Prime Lending

Subprime lending is distinct from prime lending. Where prime lenders, also referred to simply as prime lender, focus on borrowers with high credit scores, subprime mortgage lenders cater to those with lower scores. While prime credit cards and prime card loans are designed for those with strong credit histories, subprime credit cards and subprime borrowers are typically individuals who’ve had financial missteps.

3. The Landscape of Subprime Mortgage Lenders

In the UK, several institutions specialize in subprime lending. They range from established financial institutions to newer entrants in the market. The subprime mortgage lenders list uk is expansive, encompassing a range of offerings tailored to different borrower needs.

Subprime lenders understand the nuances of this sector, recognising that everyone’s financial journey is unique. Some might have a thin credit file uk, indicating limited credit history, while others might have had past financial missteps that led them to seek subprime credit options.

4. The Specifics of Subprime Mortgages

Unlike traditional mortgages, a sub prime mortgage or sub-prime mortgage is crafted for those with lower credit scores. The terms “sub prime” and “sub-prime” are often used interchangeably. This mortgage type acknowledges that while a borrower’s past may have financial blemishes, their present financial standing and future potential are more indicative of their ability to repay a loan.

While subprime lending has its benefits, it’s also accompanied by higher interest rates. Since sub prime mortgages uk target those deemed riskier borrowers, they often come with steeper interest rates than conventional mortgages to offset potential default risks.

5. The Role of Specialist Mortgage Lenders

While many institutions offer subprime products, the list of specialist mortgage lenders uk caters explicitly to those with unique financial circumstances. These specialist lenders craft products to serve niches within the mortgage landscape, be it for those with a subprime history or those with specific property requirements.

For those seeking tailored solutions, it might be beneficial to refer to the subprime mortgage lenders list uk to identify institutions that can cater to their particular needs. These specialist lenders often exhibit more flexibility than conventional lenders, making them a valuable resource for subprime borrowers.

6. Credit Prime and Subprime Credit Cards

While our discussion primarily revolves around subprime mortgages, it’s worth noting the broader financial products available for subprime borrowers. Subprime credit cards, as opposed to prime credit cards, are designed for those rebuilding their credit scores. Such products often come with higher interest rates but can be a stepping stone to more favourable financial products in the future.

Similarly, prime credit refers to the more traditional credit avenues, typically reserved for those with solid credit histories. In contrast, subprime credit cards or sub-prime loans serve the opposite end of the spectrum, catering to those working on improving their financial standing.

7. Sub Prime Lending Trends and the Future

The demand for sub prime lending products, be it a sub prime credit card or a sub prime mortgage, has seen ebbs and flows over the years. However, as the financial landscape evolves, and institutions become more inclusive, the breadth of sub prime mortgage lenders uk and the products they offer is likely to expand further.

A valuable resource for potential homeowners exploring subprime options might be the raac survey. This offers insight into various property aspects, essential for informed decision-making.

8. Venturing into the Subprime Mortgage Terrain

While the term “subprime” might be laden with certain connotations, it’s crucial to approach this sector with an open mind. Subprime and specialist mortgage lenders in the UK are pivotal in extending homeownership opportunities to those who might otherwise be left out of the property market.

Subprime mortgages uk, be it from a subprime lender or a more conventional institution, have carved a niche in the property landscape. They underscore the idea that financial pasts don’t necessarily dictate futures and that with the right support, homeownership is a tangible dream for many.

In navigating the UK’s subprime terrain, understanding the diverse range of products and the institutions offering them is the cornerstone of a successful property journey. Whether you’re

exploring sub prime mortgages, subprime credit cards, or any other product in between, a blend of research, expert consultation, and patience can guide you towards making decisions that align with your financial aspirations.