Subprime Mortgage Lender Guide
A Guide to finding a subprime mortgage lender
If you have a bad credit history, you will probably be fed up with dealing with financial institutions. Trying to find a subprime mortgage lender may seem like too much hassle. In fact, if you need a mortgage to buy your first property, or to move up the property ladder, you will need a mortgage and if you have adverse credit a subprime mortgage lender is your best option.
Many subprime mortgage lenders are specialist companies, which may mean that you won’t have heard of them – they can’t afford the level of advertising that high street banks and building societies undertake. So how can you tell the reputable lenders from the not-so-reputable?
Finding the right subprime mortgage lender
The best way to find a good subprime mortgage lender is to enlist the help of a mortgage broker. Whilst not all mortgage brokers have the necessary expertise in the subprime market, many do and so it’s worth talking to some of your local brokers to see if they can help. Those with experience will know the majority of products in the market and will already have a relationship with the provider. This means that they can tell you which lenders to avoid and which have a product that will work for you.
Questions to ask about a subprime mortgage lender
Even if you are using a mortgage broker, you will feel more confident about the process if you are able to ask questions. There are several things you need to know both about the subprime mortgage lender and their products:
Have they included all the costs in their quote? You will need to know exactly what you are paying for, including all the interest charges and any set-up, valuation or legal fees that may be charged in addition to the capital you have borrowed.
Are there any early payment penalties? Many subprime mortgage lenders have significant pre-payment penalties. You will need to know what sort of penalties apply and how long you will be locked into the mortgage for. The longer you are locked in, the longer you have to wait to refinance to a better deal.
Make sure you know if the lender is able to vary the interest rate and if so, by how much . This will help you to plan for your monthly payments. If the interest rate is variable, you need to keep your eye on the financial news so that you know when an interest rate rise is expected.
Will making regular payments to your subprime mortgage lender help your credit rating? In many cases, if you can show that you have been making the required payments on time for a certain period, you may reduce your bad credit rating. This in turn means that you could be eligible for a better deal on your next remortgage.
Using a broker to approach a subprime mortgage lender, asking the right questions and budgeting for regular monthly mortgage payments could help to get you out of the adverse credit trap more quickly than you think. By showing a willingness to reduce both your debt and your spending, and by keeping to the agreement you make with the subprime mortgage lender, you could be on your way to a positive credit rating within a few years.