What Is A Subprime Mortgage?
A subprime mortgage is a type of loan tailored for individuals with poor credit scores or lower incomes, making them ineligible for traditional low-interest mortgages. Unlike prime loans offered to those with good credit and payment history, subprime mortgages cater to borrowers who struggle to meet standard lending criteria. Lenders may define subprime credit scores differently, typically ranging from 630 to 650 or below.
Individuals with low credit scores and a track record of late payments are often considered high-risk borrowers by lenders. Expert mortgage brokers can secure approval from suitable lenders, even if traditional banks decline applications based on credit or income issues. Lionfield Capital not only facilitates mortgage approval but also assists in devising financial strategies to enhance credit scores, enabling qualification for prime or lower interest rate mortgages in the future.
Key Guidelines for Applying with an Alternative Lender:
- Property Usage: Whether you reside in the property or it serves as an investment, alternative lenders accommodate various property types.
- Debt Ratios: Alternative lenders may approve higher debt ratios compared to traditional banks, offering flexibility in loan eligibility.
- Minimum Down Payment: Typically, a minimum down payment of 10% is required, with many private lenders extending mortgages up to 90% property value.
- Loan Terms: Terms range from short periods, such as 6 months, to longer durations, up to 5 years, offering borrowers diverse options.
- Interest Rates: Interest rates generally range from 1% above bank rates to 3% higher, though rates may vary based on individual circumstances and lender criteria.
