The sub-prime mortgage industry has made a real impact in the UK by helping borrowers with adverse credit problems, obtain a mortgage or remortgage. While this is an admirable alternative, ie. the helping of those less fortunate, let's not forget why they are doing it.
Mortgage lenders are in the business for one thing and one thing only – making money! If they help a borrower get out of their debt spiral as a result then that is simply a fortunate by-product. Their main aim is to make money out of the borrower as a result of the higher interest rates that charge them. Borrowers with a bad credit history are able to get a mortgage but they will have to pay more than a traditional borrower for the privilege of having one.
When the borrower ever does default, which is an all too common occurrence among those who have had adverse credit in the past, then the lender will make even more money. Late payment charges, default letters, court costs, etc are all charged to the borrower at a much higher rate than the actual cost of producing these documents. This is yet another example of why mortgage lenders want their borrowers to default or miss their payments, as it gives them the perfect excuse of charging them excessive fees. It also makes it almost impossible for the borrower to remortgage elsewhere as any reference will highlight the fact that that they have had difficulty with their existing mortgage, and this is enough to put any future lender off!
So do not be fooled, lenders have no problem with people defaulting on their mortgage as it simply gives them another excuse to make more money.