Around 43 per cent of people with adverse credit say that their level of debt has gone up in the last 12 months, a study has shown.
The Pepper Money Specialist Lending Study found that this was an increase from 33 per cent in its previous report.
The report continued that 30 per cent of people with adverse credit have outstanding debts, excluding mortgage and student loans, of more than £5,000.
Nearly one in ten have outstanding debt of over £15,000.
The study continued that 45 per cent of people with adverse credit have upped their use of buy now pay later in the last year, with 17 per cent saying that that it had increased a lot.
Ryan Brailsford, business development director at Pepper Money, said: “It’s often the case that customers who have a history of adverse credit also have significant balances on unsecured debt. One way to get on top of these debts is by raising capital with a remortgage to pay off the separate balances, consolidating them into additional borrowing secured on their property.
“Restructuring finances in this way requires careful consideration. However, in the right circumstances, it can significantly reduce the monthly cost of servicing that debt, which could prove a vital lifeline for households struggling to make ends meet in the current environment.”
He added: “When it comes to debt consolidation, many lenders will include a maximum debt to income ratio as part of their affordability calculation, which could limit a customer’s ability to raise enough capital to clear their debts.
“However, not all lenders take this approach, and, at Pepper Money, we have no predetermined level of debt. Some lenders will also limit the LTV to which they allow debt consolidation, but again not all lenders, and at Pepper Money, we allow debt consolidation up to maximum LTVs.
“At Pepper Money, we can also offer your customers an enhanced free legals service, covering the cost of legal work required on remortgage applications, including debt consolidation.”
As people with adverse credit are increasing their overall borrowing, this could put more pressure on their overall finances but if some have a property, with equity, it may be advantageous to look at an adverse credit mortgage to release some equity and lessen the burden on their current finances.
With interest rates at a generational high, it pays to shop around and as an adverse lender, Pepper has demonstrated that it has many different product offerings to cater for the differing needs of people with adverse credit.
A new online service has surfaced recently to offer those with adverse credit, the opportunity to see if they qualify for an adverse credit mortgage and what rates would be available to them. Furthermore, the software behind Adverse.Online is able to do this without so much as even a ‘soft search’ of someones credit file, meaning that there is zero impact to a credit file that may already be suffering.
Tony Higham, a bad credit mortgage specialist and founder of Adverse.Online said “The reasoning behind Adverse.Online was that I had a lot of clients mention to me that they had had a previous bad experience in trying to find a bad credit mortgage and that they had felt embarrassed about their situation.”
Higham added; “Whilst I was able to help those people and reverse their negative experiences with another broker it got me thinking that there must be so many more people in the same boat, who I might be able to reach out to and help with a fully online service. I can only comment on my own customer service, but the fact remains that embarrassment can deter people from seeking help and this is obviously something that need not be the case, hence Adverse.Online.”