Re: Advantages/disadvantages of dealing with the new breed of "sub prime lenders"?
Many years ago I dealt with a company which was, I think, the only sub prime lender available then. The disadvantages of this company were fourfold:
1. The interest rate was substantially higher.
2. They dealt in sterling so clients were often stung by the exchange rate and were at the mercy of it for the whole term.
3. They charged a fee when taking out the mortgage- I don't remember whether it was on a percentage basis but I do remember it being large.
4. Again I don't remember the exact details but the loan wasnt your average repayment loan. When you took out a loan for say 100,000, they immediately added on the interest for the entire term so that if for example you wanted to repay the loan two weeks ( or two years )later whether because you could now go to a normal lender or you had won the lotto, your redemption figure would now be 250000 or so.
It was a beast of a mortgage.
I've seen loan offers from GE and from Start. The only disadvantages compared to the normal market lenders that I've seen are:
1. They do, at least sometimes, charge a fee- this can be split between the company and the broker- I think the fee is generally around 1%.
2. The interest rate is higher than the competitive normal market lenders. So the ones I've seen are more than twice the best on the normal market.
The advantages are as ClubMan says, sometimes you have no other option.