How do Subprime Mortgages Work? Will I Qualify?
Subprime mortgages have become indispensable financial products for thousands of borrowers across the UK. Major banks and High Street lenders continue to scrutinise almost all applications based on credit scores alone. This even applies to secured loans where viable assets are used to cover the loan balance and all associated borrowing costs.
Getting by with a poor credit score has never been easy. This is why subprime specialists are playing an increasingly important role on the UK financial scene. Rather than immediately and automatically excluding poor-credit applicants, subprime specialists consider all applications by way of individual merit.
What follows is a brief FAQ covering some of the most important questions on subprime mortgages and their respective answers:
What Is a Subprime Mortgage?
A subprime mortgage is simply a home loan that’s been designed specifically for an applicant (or joint applicants) with a poor credit history. Increasingly, the UK’s more dynamic lending community is acknowledging the fact that maintaining a flawless credit report is almost impossible. Subprime mortgages target those who fulfil all other lending criteria for a home loan other than unblemished credit. Subprime mortgages therefore open the door to homeownership for those who would otherwise never set foot on the property ladder.
How Does the Application Process Work?
The subprime mortgage application process works in exactly the same way as a traditional mortgage application. Subprime mortgages are secured loans that are issued against the value of the property being purchased. This is the primary factor that determines eligibility, alongside the overall financial status of the applicant. Credit checks may still be carried out as part of the process but by no means exclude those with a flawed credit history. As subprime mortgages are scarcely available on the High Street you may need the support of an independent broker.
Will I Qualify for a Subprime Mortgage?
Eligibility for a subprime mortgage is established on the basis of two things – your financial status and the value of the property. You are likely to qualify for a subprime mortgage if you are able to provide evidence that you can comfortably cover the subsequent repayments. The lender will also organise a formal evaluation of the property to ensure it covers the total costs of the loan. If you are self-employed or cannot provide an extensive proof of income, it may be beneficial to speak to an independent broker or adviser beforehand.
How Can I Make Sure I Get a Good Deal?
The key to getting a good deal on a subprime mortgage lies in sourcing the right help from the start. Working with an independent broker makes it quick and easy to compare subprime mortgage deals from dozens of specialist lenders across the UK. You can also count on an independent broker to provide the honest and impartial advice you need to make the right decision. Subprime mortgages typically attach slightly elevated interest rates and borrowing costs but can still represent outstanding value for money.