Mortgages are typically classified based on the payment risk that the lender faces.
Prime mortgages (also known as “A” deals) entail lower chances of the borrower defaulting than non-prime mortgages (aka., subprime or “B” deals).
“B” mortgages are riskier so lenders rely heavily on the equity in the subject property and/or on charging rate premiums to mitigate that risk.
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