Remortgages with Bad Credit

In recent years, more lenders are increasingly offering Bad Credit Remortgages. A UK remortgage with bad credit is when mortgage holders pay off their current mortgage using a new mortgage. The lender uses the same property as security. The term “bad credit”, is a credit rating that describes a person as having poor credit status. Those who have filed for bankruptcy, failed to repay past loans, and have received court judgments for unpaid debts, are categorized as people with a bad credit history. A FICO score of 580 and below is considered to be a bad score.

Benefits

With increased remortgage availability, there has been an increase in lender competition. This means that interest rates have decreased significantly. If you have bad credit, there are a number of benefits to taking out a remortgage. By switching to a discount or fixed rate remortgage, you save a substantial amount of money. By consolidating debt, you can pay off credit cards, loans etc. You could also obtain the necessary cash for projects such as home renovation or buying a new car. There are also a full range of fixed, capped, discount, tracker, and flexible bad credit remortgages deals out there.

Implications

It is very important to consider the repercussions of taking out a bad credit remortgage. If you are unable to keep up with the mortgage repayments, your home may be at risk for repossession. By adding further debt to your mortgage, you will increase the overall cost, as well as the length of the repayment term. You should also be aware of the extra costs involved with a home remortgage. It is important to evaluate costs such as a property valuation on your home, legal costs, administration fees, and compare it to the overall costs if you chose not to remortgage. It is also essential to understand that rescheduling your debts over a longer period, and making a smaller monthly payment, will mean that you will repay more interest and therefore more money. You should also remember that you will be switching unsecured debt into borrowings that are secured. Bad credit remortgages are more expensive than mainstream mortgages and will remain so. The disadvantage is that you may have to pay a slightly higher interest rate than you would with a regular mortgage. As well, you can only get a bad credit mortgage through a mortgage broker.

Considerations

Although your credit status is probably the most significant factor determining what kind of mortgage rate is available to you, many lenders are now taking a more flexible position on who they lend to. If you have a bad credit history, and you are looking to get a better deal, getting good financial advice can really help. Seek a bad credit advisor’s advice, and most importantly, make sure you can handle more debts secured against your home. If you do not keep up with your mortgage repayments, your house could be repossessed.