Subprime mortgages are mortgages issued to borrowers with less creditworthiness or poor credit rating. Prime mortgages are issued to borrowers with good credit scores typically over 660. The level of risk is higher for subprime mortgages as the borrowers have poor credit history and thus the interest rate charged is higher than prime mortgages.
The interest rate charges on subprime mortgages are higher due to multiple factors other than credit score. The lower the size of the down payment of the mortgage is the higher the interest rate will be. Also if there are multiple occasions of late payment are seen on the credit report the interest rate will also be higher.
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