Sub Prime Mortgage Loan
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What is a sub prime mortgage loan? Read our frequently asked questions to find out more.
A sub prime mortgage loan is a mortgage that is specifically designed for people who are denied prime or standard mortgages by traditional lenders.
What makes a sub prime mortgage loan different from a prime mortgage?
Prime mortgages, or standard mortgages, are offered to people with good credit history. They have reasonably low fixed or variable rates of interest and few penalty clauses. A sub prime mortgage loan will have a slightly higher rate of interest than a prime mortgage and may also carry some penalties for early repayment or for default. The two products are different because lenders feel they are taking a bigger risk lending money to someone who already has a bad credit history.
Who can I get a sub prime mortgage loan from?
You can get a sub prime mortgage loan from a specialist lender, although some high street banks and building societies may offer products that are suitable for you.
How do I find out which sub prime loan is best for me?
You will need to do some research so that you can see which products are on the market and which of those may be suitable for you. You can do this online, 
or by reading the personal finance section of your newspaper. For the best results though, you should consider contacting a specialist sub prime mortgage loan broker, who will have a wide knowledge of the market and be able to advise you on which mortgage products would be best for you.
How can I increase my chances of being accepted for a sub prime mortgage loan?
No matter what your credit history is like, you should be able to get a sub prime mortgage loan approved. You could increase your chances of getting a better deal, however, if you can show that you are making an attempt to reduce your current debt. Ways of doing this could include having a written plan that identifies each of your debts and shows how you are paying them; a statement that shows you haven't defaulted on any of your debts over a certain period; showing that you are looking for or have obtained additional work in order to increase your income, or that you have destroyed some of the credit or store cards that you have debt with. In addition, if you can show that you have been saving money in a traditional savings account, sub prime mortgage loan lenders may see your application in a better light. Showing that you are serious about reducing your debt could work in your favour.
Can a sup prime mortgage loan change my credit rating?
What changes your credit rating is your ability to pay off your debts and avoid running up new ones. A sub prime mortgage loan is the ideal opportunity to start running your finances seriously. Ask your adviser if your lender would give you a credit reference after so many years of non-default payments. At the end of your sub prime mortgage loan term, if you have maintained the loan properly all the way through, you could have your credit rating cleared within three years.
