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Is An Adverse Credit Remortgage Worth It? | Financial Planning Tips

Is An Adverse Credit Remortgage Worth It?

Owning a home doesn’t necessarily provide the security we all believe it does. While purchasing your first home can be a wonderful and exciting experience, realizing you are having trouble meeting your monthly mortgage payments is disheartening, stressful, often embarrassing and very difficult to recover from. It is a very unfortunate reality of life, especially in the current times of an unstable economy and job losses being at an all time high. One thing that can make this situation even more troubling is if you have a poor credit score. Many lenders won’t be interested in helping you as you prove to be a high risk for them. However trying for an adverse credit remortgage could be your last option.

Don’t be mistaken in thinking these bad credit remortgages are an easy option, far from it. While obtaining a remortgage when you have a good credit score, regular income and decent equity in your home may be relatively easy. Applying for an adverse credit remortgage certainly is not. As previously mentioned, many lenders will simply not give you the time of day and turn you away because of your credit score alone. Regardless of your current situation or income, they don’t want to know you. There are however companies out there that actually specialize in remortgages for those with poor or adverse credit scores. They can offer a little more understanding and tend to look at the big picture, mainly your current income and what you can provide as security for the loan.

Finding a company that can offer you a bad credit remortgage is the first difficult step in the process. There are far more lenders out there looking to take advantage of those in difficult financial situations than there are those willing to help you. The cowboys of the business will often want you to sign over the deed to your home, pay exorbitant fees upfront with no logical explanation and provide little moral consideration for your overall financial position. Unfortunately they prey on people during a time of weakness when often it is easy to give in to short term relief. If you get even the slightest feeling someone is offering you something that is far too good to be true, run a mile. Remortgages with adverse credit are very hard to obtain so if it seems too easy, there will be a catch, you just aren’t aware of it yet. Stick with well known companies who you can find solid information and feedback on. Always visit them in person and if in doubt get a second opinion from a trusted friend or even better, a financial expert.

Once you’ve found the right company to work with and who is willing to offer you an adverse credit remortgage ensure you read the contract thoroughly; don’t make any hasty decisions simply because you’ve found someone who may be able to help you. Even the good guys will have some difficult clauses in their agreements because of your credit history. Pay particular attention to interest rates and are they fixed for the term of the loan, penalty payments, required deposit payments, ownership details, unusual stipulations and any mandatory insurance charges. You may already have insurance that covers your mortgage and you don’t want to be paying for the same insurance twice. Ask a lot of questions and don’t be afraid to ask them to explain any part of the contract that you don’t fully understand.

If you have equity in a home but suffer from a poor or adverse credit score then an adverse credit remortgage could be what helps you dig your way out of trouble. It’s not a quick fix and can be incredibly hard to obtain, but if you are out of options maybe this is the one that will work for you.

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