What is a Sub Prime Remortgage

If you are a homeowner that has experienced bad credit, or perhaps a bankruptcy or court judgment against your wages, then you have a more complicated situation when trying to remortgage your property.  To some lenders you are not a risk worth taking, but there are lenders that will consider offering a remortgage deal to someone with impaired credit history.  For those lenders it will be a consideration to offer approval on a remortgage if that remortgage has a sub-prime interest rate attached.

The lender will determine that the risk in offering a remortgage means a higher interest rate will be required to be attached to the loan.  In this case the interest rate will not be the level offered to those homeowners that have a better credit rating when seeking a remortgage.  This higher interest rate remortgage above the regular level is called a sub-prime remortgage.

It may at first seem unfair that due to a bad credit experience that offers of better interest rates are off limits.  However, the opportunity is available to get a remortgage and set a better credit history.  The sub-prime remortgage is a chance to reset the past credit history.  Once a new history is established and you have proven you are not the risk to lenders that you were in the past you too will be offered better remortgage rates the next opportunity.

Not all sub-prime remortgages are created equal.  Just as you must shop around to get the best deal and the best provider in other financial service situations, a remortgage is no different.  Make sure you are working with the right remortgage expert that can help you in this more complicated remortgage situation.  Remortgage brokers are often the most experienced experts to consider in a bad credit situation.  A remortgage lender will only be able to offer and help you with their lending criteria and deals.  A remortgage broker works with many lenders on your behalf and will know which lenders offer the best sub-prime remortgages deals and which ones are more likely to approve your application.  They will also be experienced on how to best package your application to improve your chances for approval in a timely manner.

A remortgage is often the best consideration for a homeowner that has had difficulty in the past with their budget and expenses if the interest rate is lower than their current mortgage deal.  It can also be helpful if the remortgage is going to offer the ability through a fixed rate deal to have consistent and expected repayment amounts without the worry of an increase in payments should the standard base interest rate increase.  In the situation where the benefits outweigh the higher cost of an interest rate associated with a sub-prime remortgage, then it is obviously a good financial decision even if the best interest rate remortgage is unavailable.

When you do obtain approval for your sub-prime remortgage make sure you keep your payments up to date.  Also, during the process inquire as to what steps will help you in the future to obtain a standard remortgage deal.  Consider this an opportunity to rehabilitate your credit situation and the higher interest rate on a sub-prime remortgage is the necessary cost you must endure.