What’s is a subprime mortgage?
Subprime mortgage financing is also commonly called bad credit mortgage financing. There are a few Vancouver subprime mortgage lenders catering to home owners who are having credit problems.
Some borrowers are making the mistake of putting off their decision to buy due to their bank’s turn down and not getting the help of a mortgage broker. While others continue to waste time talking to other banks, hoping for a break through. Many are missing the boat and seeing house prices going up and becoming unaffordable.
A subprime mortgage is a home loan provided to a borrower who do not qualify for the best market interest rates because of his or her deficient credit history. This type of loan cannot be sold on the primary financial market. Subprime mortgages may include loans on certain types of investment properties and certain mortgages for self-employed borrowers.
A subprime mortgage is perceived to have a higher risk of loss, hence it carries a higher interest rate than a prime mortgage loan. The interest rate for such a loan is normally 1.5% to 3% higher than the rate from a prime borrower. Subprime mortgages are risky for both lenders and borrowers due to the combination of high interest rates, poor credit history, and weak borrowers’ financial situations.
Subprime borrowers and home ownership
Subprime offers an opportunity for borrowers with a less than ideal credit record to gain access to purchase homes. Subprime lending to poor credit borrowers has enable many home buyers to buy their homes. Many would have missed the opportunity to buy their homes at lower prices while trying to rebuild their credit.
Most home owners after a period of one or two years of maintaining a good payment record, they can be approved and switch their mortgages to other prime lenders at obtain prime interest rates and gain credibility to move onto mainstream prime rates financing. Here is a link on how to repair and maintain your credit.
If you like to discuss your situation, kindly contact me (Elsie Tse) at 604-716-3369 or Email Me.