Home >>>>>>>>>>>>>>>>>Subprime Mortgage
A subprime mortgage (also known as a bad credit mortgage) is a mortgage specifically for individuals with an imperfect or adverse credit history. Subprime mortgages allow individuals who have been turned down by mainstream lenders to purchase residential property. In certain cases, depending on an individuals circumstances, after an agreed number of years has elapsed, lenders often allow sub-prime borrowers to rebild their credit rating to a certain extent and so obtain a standard mortgage rate at the same time as they start rebuilding their credit rating.
Who provides subprime mortgages?
Subprime mortgages are available through a wide range of specialist and mainstream providers. There are a great number of specialist mortgage lenders who concentrate on this market, such as Kensington Mortgages and Preferred Mortgage. National mainstream lenders have their own specific companies developed to cater for the subprime market. For example Halifax operates through subprime lender Birmingham Midshires and Abbey National owns First National.
Do subprime mortgages cost more?
Subprime mortgage products are likely to have significantly higher rates of interest and higher associated charges. Obviously, this makes subprime loans more expensive than their main stream counterparts. However, higher rates are justified by subprime lenders who argue that borrowers with an impaired credit history, poor credit history or bad credit history are at greater risk of being unable to pay compared with borrowers from mainstream lenders. Nevertheless, subprime mortgage products allow individuals who are unable to obtain mortgages from other types of mortgage lenders to buy a property, which will make subprime mortgages very popular for the forseeable future.
