What is a Subprime Mortgage?
Subprime mortgages are mortgages given out to people with little or no credit history, people who are unlikely to pay the mortgage back and were typically mortgages that were unaffordable for the borrowers yet incredibly large in size. Subprime borrowers are the complete opposite to prime borrowers who have great credit scores and are in a position to afford a mortgage without any foreseeable issues.
Subprime mortgages were one of the main causes of the recession of 2008 where multiple banks, lenders and huge firms failed and either went into bankruptcy or were bailed out by their Governments.
Mortgages termed as subprime mortgages do no longer exist but mortgages for people with bad credit do exist and mortgages for up to 100% of the property value are now beginning to make a comeback. These mortgages will of course have high APRs and in most cases higher mortgage arrangement fees.
Can you get a mortgage with no credit history?
You can still get a mortgage if you have poor credit or no credit at all but you will have to display good affordability in other regards.
This means you will need to have a good income and a sufficient mortgage deposit. In this case the mortgage deposit requirement from the mortgage lender might actually be much higher than typically required from standard mortgage borrowers.
To ensure you qualify for better mortgages you can build your credit score by undertaking certain actions such as registering to vote, getting a credit builder card or reporting your rental payment data to the credit bureau.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.