How Do You Remortgage with Bad Credit?

By definition, a remortgage simply means taking out a second mortgage on your property with your current lender or another lender, for various reasons. Borrowing money from another lender against your property is also called remortgaging. Most people get second mortgages in chase of better loan rates, to make home improvements, for debt consolidation, to get equity release or due to change in their financial situations.

However, your credit score is one of the things that lenders will always look at before they approve or decline whatever kind of loan you apply for. Maybe you messed up your credit rating by lagging behind on your credit card payments, you went bankrupt, or perhaps you defaulted on payments for your personal loan and your credit report is full of delinquencies. Well, worry not; because all is not doom for you. Aidan Briggs from Polar Mortgages says that it is not as hard to remortgage a home with a bad credit rating, as long as you have the help of a professional broker. It’s just a matter of getting the right advice from the right professionals in the remortgaging industry. It is also worth noting that different lenders have their own specific lending packages, and just because you were declined the chance to remortgage by another lender doesn’t have to give you PTSD or send you to depression.

If you do your research right, there are lots of remortgage brokers and lenders out there who can help actualize your decision to remortgage.  But how exactly do you go about remortgaging with bad credit?

Here are some crucial tips you want to read about how to remortgage with bad credit.

Get Your Credit Report

In most places around the globe, you’re entitled to a free credit report at least once annually. The document contains information about your credit history, including any credit cards that you own, loans that you’ve acquired, and any defaulted payments, as well as late or missed payments. These are usually provided by credit reference bureaus such as Equifax, TransUnion, and Experian. Getting your credit report will enable you to look at your financial situation from the perspective of a prospective lender. With this, you’ll get a general idea of what a lender is most likely to look for or consider before considering you a potential customer for remortgaging.

Keep Your Debts in Order

How Do You Remortgage with Bad Credit

Even though you can still access a loan in the direst of financial situations, it is essential to relook your debt situation and work things to trim as much as you can before approaching a lender for remortgaging. Simply negotiating with your existing lenders for a better payment plan can go a long way in providing you some form of relief. The trick is to be proactive to show prospective lenders that indeed you’re doing your best to get things in good order.

Contact a Good Mortgage Broker  

As earlier mentioned, some licensed brokers specialize in remortgaging. When you have bad credit and you need the facility, you will want to get in contact with one and discuss your borrowing needs and your reasons for remortgaging with them. The good thing about these brokers is that they’re well connected and they can leverage this to approach the lender that is most likely to review and approve your loan despite your impaired credit situation.

Approach a Specialist Lender

There are also specialist lenders who instead of evaluating borrowers based on the number of delinquencies they have; they evaluate them based on how long ago this occurred. They also take into consideration, factors that may have led to your poor credit rating, including matters such as divorce, natural disaster, illness, and job loss, just to name a few. Such lenders are open to the notion that with some support, you can easily get back on your feet and probably even clear your existing debts as you pay them back.

Understand the Probable Consequences

When remortgaging with bad credit, it is highly likely that you’ll get the loan at a higher interest rate compared to someone with good credit. Also, most banks are likely to ask a certain percentage of equity in the property, say 10%. This may also be accompanied by additional fees and charges that a person with a good credit rating wouldn’t have to deal with. It is important to have this at the back of your mind before approaching a lender for remortgaging when you have bad credit.

As you can see, having bad credit doesn’t lock you out entirely from getting remortgage financing. With the above tips, you can be able to get that much-needed financial relief for debt consolidation, clearing hospital bills, making some home improvements, or staying up-to-date with your recurrent bills. However, it is important to manage your remortgage loan better to avoid getting deeper into the bad poor rabbit hole. On a parting shot, you can do this by keeping your remortgage loans separate from other loans, avoid over-relying on remortgaging, and learning to manage your finances better.


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