Advantages/Disadvantages of dealing with the new breed of "subprime mortgage lenders"

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ajapale

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What are the advantages/disadvantages of dealing with the new breed of "sub prime mortgage lender"?

[broken link removed]

[broken link removed]

Start
 
Re: Advantages/disadvantages of dealing with the new breed of "sub prime lenders"?

I guess the main ones are:

Advantage: they may lend to those who cannot get credit elsewhere for various reasons (usually past credit problems).

Disadvantage: these people will pay a (sometimes hefty) premium for the privilege in terms of higher than normal rate margins.
 
Re: Advantages/disadvantages of dealing with the new breed of "sub prime lenders"?

Disadvantge (?): There is some anecdotal evidence to suggest that they are quicker to initiate legal proceedings when a borrower goes into arrears.
 
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.
 
Re: Advantages/disadvantages of dealing with the new breed of "sub prime lenders"?

If you have 'served your time' with a sub-prime lending institution would you be able to eventually re-mortgage with a mainstream lender in order to avail of a better mortgage rate?
 
Re: Advantages/disadvantages of dealing with the new breed of "sub prime lenders"?

Vanilla said:
The advantages are as ClubMan says, sometimes you have no other option.
Click to expand...

What's about the option of not buying if they can not afford it?

The level of borrowings is already very high in Ireland... is it actually not going to get worse with these sub lenders pushing the limits even further?
 
Re: Advantages/disadvantages of dealing with the new breed of "sub prime lenders"?

Bacchus- you are absolutely right in that I wouldnt recommend that anyone should buy with one of these companies under normal circumstances. However I think you will find that most of the time these companies deal with remortgages where the borrower is already failing to keep up payments because of spiraling personal debt. The first port of call for anyone is of course to sort it out without increasing your interest rate by rearranging existing loans, going to MABS etc. Sometimes though it can serve a purpose in consolidating loans and giving a breathing space especially if people use the opportunity to overpay, or to leave again after 2 years for a more competitive rate.
 
Re: Advantages/disadvantages of dealing with the new breed of "sub prime lenders"?

JohnBoy said:
If you have 'served your time' with a sub-prime lending institution would you be able to eventually re-mortgage with a mainstream lender in order to avail of a better mortgage rate?
Click to expand...


Depending on the reasons for joining the sub prime lender,
At least 18 months for people with previous credit issues
At least a year for people who had difficulty in proving their income (eg. self employed for less then 2 years)
 
Re: Advantages/disadvantages of dealing with the new breed of "sub prime lenders"?

This article might be apposite:

[broken link removed]
 
Re: Advantages/disadvantages of dealing with the new breed of "sub prime lenders"?

Years ago it was the moneylender in a cromby calling to the door. Now its more respectable, its a financial institution. End result - same
 
Not necessarily. Licensed money lenders can legally charge up to something like 25% APR. Unlicensed money lenders illegallly charge what they like and often have fairly, er, direct debt collection strategies. I'm not sure that subprime lenders are as "bad" as either of these.
 
Sub-prime lenders....

I know of Start and GE Money, is there anymore of them?
Or can anyone recommend one of them to me?

I know they rip ya off with interest n all but can you haggle them down?

Thanks in advance.
 
Re: Sub-prim lenders....

bassface said:
I know of Start and GE Money, is there anymore of them?
Or can anyone recommend one of them to me?
Click to expand...
There are a few existing threads that mention them already. You should be able to find them using the search facility.
I know they rip ya off with interest n all but can you haggle them down?
Click to expand...
I don't think that they rip people off although they may charge higher than normal rates because they lend to people with black marks on their credit history/status who cannot borrow from more "mainstream" lenders. I presume that sub-prim lenders are still proper lenders.
 
Re: Sub-prim lenders....

Nua Homeloans are the latest sub-prime lender on the market and im sure they would love to quote for your business....

see [broken link removed]

- I have no relationship with Nua.
 
Re: Advantages/Disadvantages of dealing with the new breed of "subprime mortgage lend

Hi Bassface,

Ive tagged your question to this thread raised a few months ago.

There is some interesting and informed commentary the whole subprime mortgage lending phenomenon on [broken link removed]

aj
 
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