Subprime loans are offered to persons having a low credit score in the market. The person who has such a bad report qualifies only for subprime lending. Each and every lending organization have their own set of rules or in a better way have their own term and conditions that are to be met by the customer before he is provided with the loan. If the candidate is in criteria i.e. he fits well with the organization with all its terms and conditions, he is provided with the loan otherwise he may be deprived of getting one.
In case of a mortgage loan even a customer with a very low credit score can get an approval for the subprime loan very easily. As always advantage comes with disadvantages and this is no exception, there is a drawback in getting subprime loans. The interest rates to which the customers are charged are really very high. This is obvious as the customer does have a poor credit score and there is every chance of loan going to the bad debts. Candidates with a good credit score can get a loan at a very low rate of interest comparing to that of a customer having a bad credit score who gets at a rate which is two or three points higher.
It is easy to get a mortgage loan even for a customer of bad credit score. The only reason behind this is that it is a secured loan. Mortgage means loan on property. The organization is on the safe side, it knows that even if the customer runs away the property is always there. The organization can at any time get back its money by selling the property. The interest rates are kept high so that the organization ends up with profit even if the customer is a default.