If you have bad credit, it doesnt mean you can no longer remortgage. If you have missed a few credit card payments or bills, got a County Court Judgment or previously filed for bankruptcy, it can be hard to apply for credit in general. However, if you face the situation where you badly need to remortgage to help your finances, rest assured that there are certain credit companies that specialize in this type of situation.
What is a bad credit remortgage?
Remortgaging is taking out another credit to mortgage on your property to pay off an existing one. There are a number of reasons you would want to remortgage but every remortgage application is processed after a thorough credit check. If you have poor credit because of a tough financial situation in the past, this could adversely affect your chances of getting a remortgage approved. A bad credit remortgage gives a chance to someone who has bad credit and yet needs to take out refinancing on a home or another kind of property. You can use it to pay off a current mortgage in order to get better rates or lesser fees from another lender.
Reasons for Having Bad Credit
You may have bad credit if you:
- Have missed payments on your loans such as credit cards, personal loans, mortgage and other bills
- Have a County Court Judgment against you
- Have a debt management plan or have filed and declared bankruptcy before
How To Know If You Have Bad Credit
If you are not sure what your credit rating is, it is best to check it before applying for any kind of credit. You can get a copy of your report from the major credit reporting agencies such as Experian or Equifax. Make sure that all the information there are correct. There isnt a single way of scoring when it comes to credit and every credit company has its own criteria, but if you want to improve your rating, always see to it that information on your report is current. If you have unused credit like a credit card that you dont really use, have it closed because you will seem to be of a higher risk to the creditors if you have a lot of open credit.
Reasons to Remortgage
Get a lower interest rate
Mortgages involve big amount of money. If you want to save some, finding another lender who could offer at least 1% off your current interest rate could mean big savings for you. If you have bad credit, your chances of getting a lower interest rate could be slimmer but if you have already been charged too many fees and a higher rate on your current mortgage because of payment problems, you could still find a better deal from a bad credit remortgage company.
Find a more secure deal
If your current mortgage has a variable interest rate and you find that interest rates just keep getting higher, it might be better for you to get a fixed rate instead. Remortgaging gives you this chance so even if you have bad credit, taking a step like this one ensures that you can take better decisions that would help you avoid another financial downfall.
Bargain for a more flexible mortgage
If you are having financial difficulties, it is a good idea to find a mortgage where you can make under payments, over payments or just about any kind of financial flexibility it can offer.
Consolidate Debts
Remortgaging gives you a chance to pay off other debts you have so that you would only have to manage one debt from a single lender. This could mean having better focus on your finances since your debts are no longer scattered. If you have bad credit, there is a good chance your interest rates are very high already so having just one consolidated debt means you can save some money.
There are more reasons people have when deciding to remortgage. Despite the financial flexibility this could offer, remortgaging may not be for everyone. There should be a lot of thought put into analyzing how much savings you can get, the timing of your decision as well as other personal circumstances. If you see that the cost of switching to another mortgage outweighs the benefits, then remortgaging is a good idea. But if you see that the deals available to you will not make much of a difference in your current financial status, then wait for a better time to do it.
Fees Involved
Before switching to another lender, make sure you get a clear picture of the fees involved. Having bad credit affects your interest rate already and you should not be surprised to get higher rates. But do know that there are fees involved when remortgaging such as the legal fees or administrative costs, which could be expensive.
How to Find the Right Bad Credit Remortgage
Having bad credit does not mean you would have to accept all bad deals just to get some financial help that could potentially be devastating for you in the long run. To find the right bad credit remortgage deal, you would need to do a lot of research. If you are confident enough to analyze everything and decide on your own, then go ahead and do that. But if you see that there are just too many options and you dont know which one is the best deal in the long run, consult an expert. You might be looking at interest rates only and you think that a lower rate could give you a lot of savings already, you may be wrong. There are also other fees involved and those fees could mean higher expenses. It is important to get the whole picture of your remortgage deal and compare every fee and every rate you come across. Companies that deal with bad credit remortgages can give you the best advice on what to look for and what to watch out for.
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