Owning a home does not necessarily mean the same as it did 50 years ago. Nowadays owning a home usually means you have an often large mortgage attached to it. Sometimes these repayments can be tough and remortgaging, the process of replacing your existing mortgage agreement with a better one, can be a great option. It can allow you to lower or increase payments, lengthen or shorter the term of your mortgage, or possibly consolidate other debt into your mortgage. Having bad credit against your name can make this process a lot more difficult. Bad credit remortgages are still possible and are a good way to maintain financial stability and work towards repairing your credit score.
A remortgage could be the opportunity you need to finally put in place a realistic budget that works, and that you will stick to. Obtaining credit cards, store cards, car loans or personal loans are almost impossible once you have bad credit. These people are not interested in taking the risk on someone who has possibly defaulted on payments before. They base their decision on past financial facts, not on your current situation or how much you want to prove them wrong. If you are in the fortunate situation of owning a home, then bad credit remortgages could be your solution.
While you may be declined other forms of credit, there will be a company out there willing to offer remortgages to those with bad credit. This is because they have a certain amount of equity in the home they own. The equity is considered security against the loan, so the more equity you have in your home, the more you could potentially borrow. Remortgages can be used to repay other debt or used as an alternative to other forms of finance. People often remortgage to complete home renovations or to even take a much needed holiday.
Bad credit remortgages – also known as adverse credit remortgages – do usually carry different rules and restrictions. Chances are you will only have access to certain interest rates, while lower interest rates may be reserved for those with good credit. This ultimately means you will be paying more for your mortgage in the long term. Sometimes there will be extra fees associated with a remortgage for someone with bad credit. These would often be required upfront instead of being incorporated into your mortgage as is sometimes the case. A deposit or penalty payment is often required upfront for those with bad credit. This is to safeguard them against the possibility of a missed payment or two. Missed payments will likely carry heavy penalties also.
The best place to start looking for a remortgage is probably the bank you currently use, especially if you have been a long term customer. Alternatively with any finance company with whom you have a good relationship or the best repayment history with. Speak to family and friends about who they bank with and see if they can offer any good recommendations too. It’s ideal to get a good understanding of what is on offer from a variety of different finance companies. This allows you to compare interest rates, monthly payment amounts, deposit payments, payment penalties and all other terms of the agreement.
Consider your options carefully, take your time and don’t make any drastic decisions. If necessary seek advice from an independent financial expert, lawyer or accountant. They can advise if you are being offered a good deal or perhaps suggest other alternatives to your current financial situation. Bad credit remortgages have the ability to make life a lot easier for you; it’s just the work to get them in the first instance that can be tricky.