Bad Credit Remortgage UK

A remortgage is the process of paying off one mortgage loan with the proceeds from a new mortgage loan using the same property as security.

Often people remortgage to get better interest rates or to consolidate their debts or raise money from the equity in the property.

Remortgaging to get better rates might be difficult if you have a poor credit rating; mainstream lenders will not accept you and bad credit lenders always have higher rates than what you'd get from a mainstream lender. Therefore, in this case, it's better to work on improving your credit rating before applying for a remortgage loan.

However, if your aim is to pay off your debt or stop your home being repossessed or simply to raise money, a bad credit remortgage loan could be the perfect solution.

Advantages of a bad credit remortgage
Besides the obvious i.e. reason for remortgaging, there might be other benefits to a remortgage for people with bad credit:

Improve your credit standing
As you may know, credit ratings go up and down, things like bad debt, mortgage arrears, CCJ's, missed payments on a credit card etc, all have a negative effect on your credit rating.

By remortgaging you can pay off all your other debts, make a fresh start with a new mortgage lender and if you manage to avoid more hiccups, you can turn around your credit rating in 1 to 3 years.

Benefit from your property's value
UK house prices have been raising steadily in the last few years, your home may be worth a fair bit more than when you bought it, even if you haven't paid much into it. If you need money, you can remortgage at the property's current value, pay off the old mortgage loan and keep the difference.

What to consider
When you remortgage with bad credit, you should expect that the interest rates will be slightly higher than normal, therefore, you should look at a bad credit remortgage as a short-term solution until you've improved your credit rating:

Early Repayment Charges
Your current mortgage may incur an Early Repayment Charge, if you remortgage to a different lender within a set period (e.g. 3 years with some UK lenders). If this applies to your current mortgage loan, consider whether you'd loose out by paying this fee to move your mortgage.

This should also apply to the remortgage, bad credit doesn't stay with you forever; if you improve your credit rating down the line, you might want to remortgage with a mainstream lender in order to get a low interest rate. Find out what it would cost, should you wish to remortgage again in future.

What happens if you miss a payment?
If you've had mortgage arrears in the past, chances are, you might have some in the future. Some lenders would allow 1 or 2 missed payments (within a 12 months period) before putting a negative effect on your credit rating and threatening your home, others might not be so lenient. It's worth putting that into consideration before you remortgage with a particular lender.


Related:
Mortgages for people with bad credit - Adverse credit mortgages - Bad credit mortgages - IVA mortgage - loans for people with bad credit - credit cards for people with bad credit - bad credit credit cards