Recent figures are showing that the number of repossessions in Ireland have doubled in the last five years, this means that more and more people are being forced out of their homes, a good deal of these are people that have a ‘sub-prime’ mortgage, this means that they received the mortgage from a lender who was aware of their past credit issues. This doesn’t take into account the number of people who will simply sell their home in order to avoid a reposession this is not a forced sale by the lender, however it would certainly be monetary pressures that inspire most people to opt for this choice.
Residential mortgages can be either ‘Prime’ i.e. the kind you walk into any mortgage broker or bank branch and apply for, or ‘Sub-Prime’ which are normally distributed direct by the Sub Prime lender or via an intermediary such as a mortgage broker who may be able to offer several of them and therefore compare and contrast them to the client. You’ll know them because typically the advertisements for it are along the lines of ‘if you have had problems in the past’ or ‘even if you have judgements or credit issues we can help’ etc. they are aimed at the sector of society who don’t fit the box of the high street banks.
If you have credit issues and need a mortgage or if you have had credit issues in the past a sub-prime mortgage is often the way to meet your financial needs because (although they do come at a higher rate of interest) you can raise finance where many lenders would have refused it. The downside of this is that if you already had financial woes this type of loan does not mean you will not have them in the future. In fact statistically if you have had financial issues in the past you are very likely to have them again in the future according to research from the U.S.A.
If you find that this is the type of mortgage that you require be sure to consider all of the factors involved in obtaining it beforehand, for instance many sub prime lenders charge an ‘arrangement fee’ which means you have to pay them for setting up the loan. So as always – Read the small print!