While the path to arranging a remortgage may not be as simple as when you initially bought your home, there are lenders out there who will allow you to remortgage a property when you have bad credit.
With increased living costs and interest rates that will be higher than they were when you first took out your mortgage, you could be worried about what this could mean for your remortgage chances.
At Adverse Mortgage Advisors we know the lenders that will take everything into consideration when your current deal ends, and we make sure your application has the best chance of success.
Once your current deal ends, your current lender may want to take another look at your circumstances if you are looking to make changes to your current mortgage or apply for further borrowing, so if they have changed; you may have a different job, had a baby, are paying off a personal loan taken out for home improvements, or even have missed a few payments on your credit card. Any of these things could affect your chances of getting another mortgage with the same lender.
However, staying with your current lender might not actually be right for you, so taking the opportunity to have a look around could be the best option in the long run.
Definitely! Taking the opportunity to way up your options at this point is a good idea. There are lots of different mortgage products available and there are many factors to be considered. Increasing your mortgage term, or opting for a longer fixed rate period, are just a couple. Speaking to one of our specialists will help you to understand what the best products are for your situation.
If you currently have a lot of unsecured debt such as mail order, credit cards loans or hire purchase agreements and are worried that you are going to struggle to pay a higher interest rate when your current fixed term has ended, now maybe a good time to restructure your debt by releasing some of the equity in your property and using it to clear some of your other debts to lower your overall monthly payments. Or if you have been thinking of investing in home improvements but haven’t been able to afford them, now could be the time to see how much extra mortgage you could get to pay for them.
Remortgaging means switching from one lender or product to another when your current mortgage term ends or you want to take advantage of better interest rates or terms. When you remortgage, your replacement mortgage provider will consider how much money you’ve already paid off the capital amount (known as equity).
They will lend you the money to pay off your existing mortgage and any early exit fees, and in turn, you make your new monthly mortgage repayments to them.
Just like your initial or previous mortgage applications, they also need to assess your credit worthiness or check your credit score, how much you want to borrow, the term of the plan, and how much you can comfortably afford to pay each month.
The right remortgage deal may also help you to reduce your current mortgage payments, leaving you with more money to chip away at those monthly bills.
Improving your credit score before applying for a remortgage can help to increase your chances of being approved as well as the ability to access lenders with lower interest rates. Here are some tips for improving your credit score:
Checking your credit report regularly to ensure that the information held is accurate and up to date. If you notice any errors or issues, contact the credit reference agency as soon as possible to have them corrected.
Registering to vote and being on the electoral roll can help to improve your credit score, as it confirms your identity and current address.
Paying bills on time will demonstrate that you are financially responsible, which will improve your credit score.
Try to keep the levels of debt that you have to a manageable amount and ensure credit card balances are kept under 50% of their available credit limit.
Equity is the difference between the market value of the property and the outstanding mortgage balance. If your property has appreciated in value or you’ve paid down a significant portion of your mortgage, remortgaging allows you to release some of that equity as cash. This released equity can be used for various purposes, such as home improvements, investments, funding major expenses like education, weddings, or for debt consolidation.
If you have outstanding balances on your credit cards, the likelihood is that you are paying a very high rate of interest, and if your situation means that you are only able to pay the minimum amount each month, then the outstanding balance really isn’t reducing by much either. If you took out a loan to buy a car or for new windows for your home, you can get other home improvements done which will save on your energy bills, but all these extras soon add up.
If you add up all these commitments and increase your mortgage to pay them off, this is called debt consolidation and usually results in you paying less on a monthly basis because the repayment has been spread over a longer period.
Our specialist mortgage advisors are here to help you decide if this is an option for you and assist you with the mortgage application process that will get you the best rate for your circumstances.
If managed correctly, and by securing a favourable interest rate, it could. Secured loans are generally provided with variable interest rates, which can fluctuate higher or lower than a fixed rate that comes with a personal loan or credit card.
It is important to understand that although you are lowering your monthly payments when you consolidate your unsecured debt onto your mortgage, you will be increasing your mortgage debt and paying interest over a much longer period of time, meaning you will be repaying a lot more interest than if you hadn’t consolidated the debt.
To achieve the ideal rates, for a personal loan or a secured option, you’ll need to have a good credit rating. Borrowers with a low credit score might not qualify for the rates you need, or even the type of loan you’re hoping for.
Always remember: Think carefully before securing a loan against your property. You need to be certain that you can meet your monthly repayments and never find yourself in a situation where you could lose your home.
While remortgaging can offer several benefits, it’s essential to consider the overall costs involved. Lenders may charge arrangement fees, valuation fees, and legal fees for processing the remortgage. Additionally, if you’re currently within a fixed-rate mortgage or an introductory period, there might be early repayment charges associated with ending the existing mortgage prematurely.
To determine whether a remortgage is a right option for you, call one of Adverse Mortgage Advisors who will assess your specific circumstances, evaluate potential savings, and guide you through the remortgage process, ensuring you make the right decision about what to do.
The top five most common reasons to remortgage include:
If you have questions about getting a mortgage with an adverse credit score, read our FAQs. Our wealth of knowledge within this market means that we’re confident in our ability to offer specialist mortgage advice and secure the mortgage you want regardless of your credit history.
Remortgaging means switching from one lender or product to another when your current mortgage term ends.
A Product transfer is a process where a borrower with an existing mortgage chooses to switch to a new product offered by their current lender.
Debt consolidation is when you are releasing equity from your home to repay unsecured debts such as mail order, credit cards, personal loans or hire purchase agreements.
People choose for a variety of reasons such as securing a new fixed interest rate if your initial fixed period has ended, releasing equity for home improvements or debt consolidation, or to add or remove someone from the mortgage and property also known as a transfer of equity.
A Transfer of equity is a legal process where the ownership of a property is transferred from one individual or entity to another. The transfer often involves adding or removing individuals the properties title deeds.