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Good credit and bad credit home loans compared

People who have missed mortgage repayments might be receiving favourable treatment over first-time buyers, the Daily Mail reports.

The newspaper investigated whether a buyer who had missed as many as three loan repayments in a year would get a better deal than a buyer who did not previously own properly and had not saved for a deposit.

Even if the first time buyer had a good credit history, the best deal they could find came with a £699 fee and offered a rate of 6.89 per cent.

However, the homeowner with the poor credit history could get 6.69 per cent with a similar fee - equating to repayment savings of £200 per year on a £130,000 loan.

Nevertheless, a homeowner with a good credit history would get far better treatment from high street lenders than both of these borrowers - they can expect rates as low as 4.75 per cent for a £1,500 fee.

The credit crunch has been blamed for shutting first time buyers out of the market in this way.

Research from Abbey, released earlier this week, has shown that two thirds of first time buyers have been put off their property purchase due to current market conditions.

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