Bad Credit and Remortgages
Whenever you’re looking to secure any borrowing, particularly the substantial amounts involved in mortgaging and remortgaging, you’ll naturally want to secure the best deal that is available to you. This deal will be more expensive if you have any poor credit history and you will only be able to apply for a bad credit remortgage.
It is necessarily the case, that what deals available to you will depend to a greater and lesser degree on your credit history. Whether you’ve had a poor credit rating, CCJs or have just generally not had the best history with borrowing, this is bound to affect the options that are available to you. However, having a less than perfect credit history does not mean you can’t get a good remortgage deal, although it might mean you need to shop around a little more.
When you apply for lending, whether it’s a loan or a mortgage, the lender will perform a number of checks while considering you.
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Typically, with large amounts of borrowing such as in a remortgage, they will carry out credit checks through the services of a credit reference agency. This is part of how they work out the potential risk to them of giving you the borrowing, and is fed into the deals that they offer you. The lenders will naturally look to protect their interests in the deal, which means higher rates and less favourable terms if they see you as an increased risk.
You may find that mainstream financial institutions such as banks may be less inclined to offer you attractive remortgage deals if you have had bad credit. However, there are lenders who will consider you, but you should always make sure you do as much research as you can about any lender before making a deal with them. If it’s an organisation you’ve never heard of, see if you can find out about past experiences other people have had with them online.
When you’re considering a remortgage, as well as shopping around to see what rates and deals are available, it’s also worth speaking to your current lender to see what they’re willing to offer you. If you do stick with your current lender, it can save money on fees and legal costs etc, so remember to take this into account when you’re comparing deals.
If you have had bad credit, think extra carefully about getting a remortgage. When done properly, a remortgage may actually help you to work towards repairing a bad credit rating, but when chosen poorly, it may just leave your finances in a much worse state than they are currently. If you’re struggling with the bills a remortgage deal may seem appealing, but make sure you’ve understood fully what the impact will be on your outgoings in both the short and long term.
Also, if you have good credit, bear in mind that it’s not necessarily wise to get as much borrowing as you can on the basis of this. If you have good credit and are looking to remortgage, you can get yourself a deal that will reduce your monthly outgoings and/ or the length of time it takes to pay the mortgage off, so make sure you use your credit history to your advantage.