Updated 28th September 2020
What is a subprime mortgage?
Subprime mortgages are also known as bad credit mortgages or specialist lending. Subprime mortgages are available to people who don’t fit with a high street lender. Reasons could be down to previous bad credit or a having a more complex set of circumstances. Interest rates are always a reflection of risk, so the higher the risk the high the rate. As such subprime mortgages tend to have higher interest rates and arrangement fees than high street lenders.
What deposit levels will I need for a subprime mortgage?
This will come down to the level of adverse credit and the date it was registered. For historic adverse credit it is possible to get a mortgage with a 5% deposit but only by using the government backed Help to Buy Scheme. Click here to read all about the scheme. More than likely you will need to have a minimum of 10% and ideally 15% deposit.
For more recent adverse such as bankruptcy & IVA’s you could need as much as 30% deposit. Your subprime mortgage expert will be able to tell you exactly how much deposit you will need for your particular set of circumstances having discussed this with you.
Will I need a subprime mortgage?
There are many reasons you might need to use a subprime mortgage. This could be something minor such as a low credit score through to bankruptcy & repossession. The subprime mortgage market is complex, and you will need a mortgage expert to advise on the best options available to you.
You will also need to bear in mind than many of the subprime lenders only accept applications from intermediaries.
Below is a list of the reason you might need to use a subprime lender.
- Low credit score
- Missed payments
- Debt relief order
- Debt management plan
- Financially linked to another person
To check your credit report click here
What interest rates would I pay for a subprime lender?
This will vary from lender to lender and the loan to value (how much deposit you have). Typically, the rates will be between 3% and 6%, however in some circumstances of severe adverse coupled with non-standard construction this could go as high as 8%. The subprime market is forever evolving, so contact one of our mortgage experts to find out the most accurate figures/rates.
Will I need a subprime mortgage broker?
The subprime mortgage market is very specialised, with each lender having different criteria and an appetite to lend based on several factors. Because of the higher interest rates its vital to make sure you’re placed with the correct lender on the best rate available.
Most subprime lenders only accept applications via a mortgage intermediary, this means you that you are not able to apply to them directly yourself. Your mortgage expert will run through all the details with you, check your credit report and discuss your case with the business development manager. Taking these steps will ensures that any application has the best chance of being accepted.
Speak to a subprime mortgage advisor
There are many lenders available ranging from high street to specialist lenders. Most people go to their own bank, get declined or can’t borrow what they need – just because one lender has declined you, don’t give up.
Our mortgage experts will look at each case before deciding which lender is right for you and your individual circumstances. All the mortgage brokers we work with are whole of market and offer unbiased advice. They will have access to all the specialist lenders to really enhance your chances of achieving the mortgage you need.
The expert brokers we work with have experience in dealing with all aspects of subprime mortgages and importantly using the whole of the market to access the very best deals available.