Understanding Near Prime mortgages: what you need to know

At Atom, we believe in making borrowing simpler, faster and more accessible for everyone. That’s why we’ve published our inaugural Near Prime Index, a report looking into the mortgage market for those with less-than-perfect credit scores. With more people suffering a credit blip and falling into this category, we want to shed light on this important area and help you understand how it might affect you.

What is ‘Near Prime’?

You might be wondering what ‘Near Prime’ means. Essentially, it refers to borrowers who have a credit score that is slightly below what lenders consider to be strong credit. This might be because you previously had a good credit score and experienced some financial difficulty or you’re recovering from a position of bad credit. Life events or some missed payments, even if that was due to an admin error or just forgetting to pay, can sometimes impact your credit record, pushing you into this category.

Having less-than-perfect credit doesn’t necessarily mean you are unable to pay a mortgage, and that’s where Atom can help.

Key insights from our Near Prime Index

Our first Near Prime Index covers the first six months of this year and looks at the latest economic insights, our own lending data and the views of mortgage brokers from across the country.

• It affects more people than you think: Credit issues can impact all households, not just those on lower incomes. We found that a significant portion of our Near Prime cases involve households with higher than average incomes, with nearly a third earning £75,000 or more.
• Helping first-time buyers: Over half of our Near Prime cases are for first-time buyers. This highlights how crucial Near Prime lending is in helping people get on the property ladder.
• Self-employed borrowers: If you’re self-employed, the fluctuations in your income can sometimes affect your eligibility for Prime finance. Our data suggests a higher proportion of Near Prime customers are self-employed.

What we’re doing to help borrowers

We’ve seen a clear demand for more understanding, flexibility, and automation for borrowers with less-than-perfect credit. Here’s how we are responding:

• Common sense approach: We believe in assessing each case on its individual merits, not just relying on a “computer says no” approach when we see someone has a black mark on their credit file.
• Competitive pricing: We aim to base costs on actual risk, which can open up the market to more borrowers who we believe are capable of paying a mortgage.
• Technology for good: We’re using technology to support Near Prime borrowers, making the process smoother and providing a decision quickly.
• Education is key: We’re committed to helping you understand what behaviors can push you into the Near Prime category and, more importantly, we offer a clear path to help our Near Prime borrowers return to Prime status.

We’ve seen record-breaking demand for our Near Prime products this year, demonstrating just how vital these options are. We’ve even increased our maximum Loan-to-Value (LTV) on Near Prime to 90%, which is part of our commitment to helping more people with smaller deposits access the housing market.

If you would like to view the full Near Prime Index report, you can view it here.

If you’re looking for further information on Atom’s Near Prime mortgages and what we can offer, make sure you visit our dedicated pages.