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How To Make A Sub Prime Secured Loan Application

May 21, 2008
If you are wondering how to make a sub prime secured loan application, the answer is 'very cautiously.' Sub prime loans are loans given to individuals considered a credit risks for a range of reasons. Low income and late payments of bills can lead to being included in this category.

Approximately twenty five percent of all loans in the U.S. are sub prime. Since lenders charge much higher interest rates for sub prime loans to the very people who can least afford high rates, it is no wonder that a lot of people who have been sweet talked into these loans are losing their homes. This is not to say that it is never a good idea to make such an application.

If you have ever been declared bankrupt or have entered into an Individual Voluntary Agreement the only mortgage you are likely to get is a sub prime mortgage. The worse your credit history is, the more sub prime you will be considered and the higher the interest rate you will have to bear. Although the UK sub prime market is not the same as America's the arrears rate on loans is twenty times high on sub prime mortgages than it is on prime mortgages.

The only thing protecting many people from financial collapse is the steep rise in housing prices over the past decade which has given them equity to draw on or capital gains at sale. The sub prime debacle in the United States has a lot to do with low start adjustable interest rates which rise after an introductory period to high sub prime rates.

This is less of a problem in the UK, however it is essential that you are fully aware of the terms of a loan before you make a sub prime secured loan application. Don't be so desperate to borrow that your only concern is how to make a sub prime secured loan application. It is much more important to ensure your long term financial security.

Having said this, there are some situations that warrant making a sub prime secured loan application. If you have the opportunity to purchase a property significantly below its market value and can resell quickly with minimal outlay, then a sub prime mortgage may be an answer.

However, bear in mind that things can go wrong and it may take longer to sell than you thought. So you still need to negotiate the best interest rate you can within the sub prime market. You don't have to worry about how to make a sub prime mortgage application, you apply for a mortgage loan and the bank either designates your application as prime or sub prime.

A sub prime secured loan application is worthwhile if you have an adequate deposit, the ability to make the monthly payments and purchase a property for below market value. Do not commit to a sub prime loan that will increase substantially after an introductory low rate period.

Make sure that the future rate is no more than 2 to 2.5 percent above the prime interest rate and preferably lower. When it comes to sub prime borrowing your focus should not be on how to make a sub prime mortgage application. It should be on how to make a safe financial decision.
About the Author
Our specialist website shows you how to make a sub prime secured loan application UK even if you've been turned down by your bank. Self-employed people are welcome, even without proof of income. CCJs, arrears and other difficult cases are a speciality. Apply now to see what a fantastic deal you can still get!
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