Adverse Credit Remortgages
Adverse credit remortgages are the products designed for moving your mortgage loan from one mortgage company to another…
….. but with terms to fit someone with less than stellar credit.
If adverse credit remortgages or remortgage are an unfamiliar terms to you, they’re much the same as a refinance. A remortgage loan is a term common in the UK whereas a refinance loan or bad credit loan are common in the US.
The primary purpose of adverse credit remortgages is to make smaller monthly payments and make a significant difference in your monthly budget. This is particularly true in an economic climate like the current one, where rates have dropped to about the lowest possible levels.
There are, in fact, many good reasons to justify adverse credit remortgages like:
- Better rate for lower payments
- Reduce debt or consolidate auto loans or credit cards
- Release equity or cash out for repairs or improvements
- Switch products for better loan servicing or terms
Adverse credit remortgages may seem out of reach for anyone with poor credit, especially considering today’s economy. Lending restrictions have tightened and loans are harder to get but, that doesn’t mean it’s impossible. In fact, it’s a perfect time for a remortgage search to find a more affordable rate.
Many lenders are now offering adverse credit remortgages or refinances designed for customers with adverse credit. The fact that more products are available for consumers with poor credit means terms and rates are more competitive than in the past. The rates will still be higher than for someone with stellar credit but are getting better all the time.
If approached properly, adverse credit remortgages can help you begin to work towards repairing a bad credit rating.
Be aware that most lending institutions will require at least 10% equity in the property if you are applying with a poor credit rating, or possibly as much as 25%. Adverse credit remortgages may also be subject to additional fees or charges which vary from institution to institution.
The simple fact regarding adverse credit remortgages is, the better your credit history the better remortgage terms will be available to you. It doesn’t mean you cannot find a great deal, it just means you have to shop more. Know your credit history and do your own due diligence to understand current guidelines for adverse credit remortgages, common jargon and typical terms or rates being offered by different institutions. The more you know the better off you will be. Don’t be afraid to call lenders and ask questions. In fact, call several about adverse credit remortgages and take notes.
Here are 6 questions to consider:
1. How do I determine the value of my home? Initially, you can find calculators online or you can compare to recently sold similar properties in your neighborhood to get a general idea.
2. How much do I currently owe? This is a very important number because it’s used to calculate the equity in your home. If the lender requires say, 20% equity, then the loan amount cannot exceed 80% of the value. If this is the case, you will need to make a down payment to make up the difference.
3. How good or bad is my credit? There are many free or low cost resources for obtaining a credit report. Search online but be careful to deal with reputable sources. This is important to know when researching adverse credit remortgages
4. Can I land a decent deal if I have poor credit? Once you know how good or bad your credit is you will learn a great deal by asking this very question to several lenders. Depending on the answer, you may need to re-evaluate the timing in considering adverse credit remortgages and take steps to repair your credit history.
5. How can I repair or rebuild my credit history? The internet is full of information on what to do. Or, you can buy books written on the subject. You can even find good resources at the library.
6. How much can I save with a remortgage? Since there are costs associated with adverse credit remortgages or refinances you will want to determine if it’s really worth it. For instance, if you’re not going to stay in your home for several more years to recoup your costs then you may reconsider whether to move forward with the remortgage.
What you don’t know can hurt you so it’s important to educate yourself about the process and the products available for adverse credit remortgages.
