Subprime Mortgage

The main advantage of a subprime mortgage is that it can give people with adverse credit histories access to a mortgage, which they might not be able to do otherwise. This means they can purchase a home or an investment property and start building equity even if they've made some financial mistakes in the past.

However, it’s important to be aware of the potential drawbacks too. Subprime mortgages usually come with higher interest rates and smaller LTV/loan amount caps, meaning the borrower will have to make more sacrifices in terms of their monthly payments and possibly their lifestyle. The good news is that this can be reviewed in the future by remortgaging to a better rate once you have built up a better credit score.

If you're a first time buyer or looking to buy a new home but don't qualify for a conventional mortgage, subprime mortgages might be a solution for you. Although these loans come with higher interest rates than traditional mortgages from high street lenders or building societies, they can help satisfy the financial requirements of people who wouldn't otherwise be able to buy a home. Of course, no one should apply for a subprime loan without considering their finances and the potential consequences.

So, when should you think about applying for a subprime loan? Generally, it's best to consider this if you need more time to build up your credit score or if you've experienced financial problems in the past that have fundamentally changed your credit history. Subprime lenders learn about your credit history and income and don’t credit check in the traditional way when evaluating loan applications, so they can help borrowers with less impressive credit histories secure mortgages. Additionally, some subprime lenders will accept borrowers with no minimum credit score at all which makes them an attractive option for those with limited borrowing experience or without any sort of established credit history.

Ultimately, understanding the advantages and disadvantages of a subprime mortgage can help ensure that any decision further down the track is made with full knowledge.

Some subprime mortgage lenders include:

• Norton
• Bluestone
• Together
• The Mortgage Lender
• Foundation
• And more

In order to access a subprime mortgage lender you’ll likely need to use a mortgage broker that can act as an intermediary. That's where John Charcol comes in. We're a subprime mortgage broker that specialises in helping people with bad credit find the lender best suited to their needs. We know how different lenders view and assess applications, so you can be confident your application is sent to the right place. This means we can give you the best chance of being approved for a subprime mortgage and can also ensure you get the best terms and interest rates available for your situation.

Not only will lenders want to see that you can afford the loan, but they'll also want to make sure your adverse credit habits are behind you.

In addition to meeting a mortgage's usual requirements, here are some other factors they'll consider:

• How much deposit you have - a higher deposit can increase your chances of application approval. Subprime lenders may require deposits of 20% - 30% to reduce the risk of lending you money
• Your income - subprime lenders will typically require you to be in full-time, permanent employment or self-employed with a consistent income. This stability helps them assess whether you'll be able to meet your mortgage payments. If you've just started a new job, you may need wait before applying for a mortgage to build up your employment history.
• The story behind your credit score - not all bad credit is equal. Subprime lenders understand that sometimes there are extenuating circumstances behind your financial history, so they're willing to take more into consideration than just the points on your credit report. They will want to know the story behind any defaults and CCJs, so it's important to clearly explain your situation on the application

We understand that finding a mortgage with bad credit can be daunting, but John Charcol is here to help. Our expert advisers are on hand to guide you through the entire process from start to finish, from gathering documents, to submitting your application and making sure you get the best mortgage for your needs.

Although it may be difficult, securing a commercial mortgage with bad credit is not out of the question. Your ability to secure one will depend on factors such as how much you wish to borrow, your past credit history and how large a down payment you can make. It's possible to obtain a mortgage for a business property even with bad credit, but your credit history will determine the subprime mortgage interest rates and repayment terms you're offered.

If you've explored your subprime mortgage options and believe you're eligible, the next step is to contact a specialist broker like John Charcol. We know the industry inside and out and can help you find the lender best suited to your needs. What’s more, most subprime lenders only work through intermediaries like John Charcol. So if you don’t use a broker, you’ll probably miss out on a lot of potentially better deals.

At John Charcol we look at your credit history, assess what kind of loan would work best for you and advise on the best lender to approach. Once we have the necessary documents, we'll fill in the application forms and make sure everything is correct before submitting them to the lender.

By engaging a specialist broker like John Charcol, you’re maximising your chances of being approved and getting a competitive rate. If you’re struggling to get a mortgage due to bad credit and need help finding the right lender, please contact us on 0330 433 2927. We’ll be happy to discuss your situation and provide guidance.