GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

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Sub-prime Borrower


Synonyms:near-prime borrower, non-prime borrower, sub-prime lending
Filed Under: financial-banking, mortgages
Tags: banking, mortgage
 

Definition of sub-prime borrower

sub-prime borrower
1. A borrower with a less-than-perfect credit report due to late payments or a default on debt payments.

Related Terms and Acronyms:

  • bad credit loan   A loan taken out by someone with bad credit.
  • borrow   To get a loan of money.
  • credit rating (CR)   A judgement of a person's ability to repay debts. The rating is often based on a person's current and projected income and past debt payment history. Also called a credit score.
      ➥  A metric to measure the credit worthiness of a debtor.
  • credit report (CR)   A report on a loan applicant's willingness and ability to make payments in a timely manner in the past. This report is provided to the bank by an outside agency.
      ➥  A report that outlines the credit worthiness of an individual or entity.
  • delinquent mortgage   A mortgage loan where the borrower fails to make payments as specified in the loan agreement.
  • Equifax (EF)   A major credit bureau company in Canada along with Trans Union.
  • predatory lending (PL)   Lending practices that are unfair, deceptive or fraudulent.
  • prime lending rate (PLR)   The rate of interest charged on loans by chartered banks to their most creditworthy customers.
      ➥  Bank of Canada's prime (best) lending rate.
  • prime rate   The rate suggested by the Bank of Canada on which most banks base their prime mortgage lending rate.
  • sub-prime mortgage   A mortgage loan that is granted to a borrower who is considered sub-prime (has a less-than-perfect credit report). Sub-prime borrowers have either missed payments on a debt or have made late payments. Lenders charge a higher interest rate to compensate for potential losses from customers who may default on the loan.

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