The Bad Credit Remortgage
Keywords: bad credit remortgage, bad credit loans, adverse lenders, remortgage
When looking to remortgage your aim is to switch to a deal that is more beneficial to you and saves you money/increases flexibility etc, whether this be sticking with your present lender or changing to another.
The process of remortgaging with bad credit is the same as getting other mortgages, the difference being you are not purchasing a property.
What Are The Benefits Of Remortgaging?
Remortgaging is a chance to switch from an inadequate mortgage and take full advantage of current products available such as fixed rate, tracker or discount mortgages which can offer you more competitive rates.
Choosing the right deal for you is just as important when remortgaging as it was the very first time. Consideration should be given on your prediction of future interest rates, your own risk assessment, your income and the balance of the loan outstanding.
You will also need to weigh up your monetary needs and present circumstance.
Bad Credit Remortgages also enables you to cut loose from a dissatisfactory lender as there is nothing to say you should stay with the same one. Doing either of these things when remortgaging may considerably reduce your monthly out goings.
This is just one benefit of deciding to remortgage. Say for example you have a loan of 100,000 and are paying a rate of 7.5% interest; you then switch to another lender which has a rate of just 7% interest. This would mean you would be saving 31 each month, thats nearly 400 per annum.
Sometimes the money tided up in the house could be put to better use else where. For an amount larger than what is needed to repay your original mortgage, remortgaging can release some of this equity to put towards investing in a new business venture or maybe even another property.
How Long Will The Process Take?
The process of remortgaging tends to be faster than that of a normal mortgage (but slower than bad credit loans) as in this case youre not buying a property. The whole process without considering individual circumstances should take on average six weeks.
The Cost of Remortgaging
As with your original mortgage, a survey to confirm the value of your property will need to be done as the first one will no longer be valid.
Add onto this solicitors fees and administrative costs, however these will be lower than mortgaging for the first time and depending on your lender, they may be able to recommend certain people in association with them that could lower your costs.
There maybe early repayment charges on your existing mortgage. This is when there is a penalty if you redeem the mortgage within a fixed period of time after commencing. For example this could be additional pay of three to six months or a percentage of the loan amount.
When looking at the cost of a bad credit remortgage you also have to look at the possible longer term benefits of the process and the money you could save.
Quick Action Plan
If still indecisive on whether remortgaging could work for you, run through the following points: First of all communicate with your existing lender and ask for a redemption statement.
This indicates what, if any penalties you will be charged in the event of remortgaging, it also states the amount still left to pay on your current mortgage. When looking at a new mortgage deal be sure to look at all the small print and ask for the lender to show you clearly what your potential repayments would be.
It is always useful to ask for something in writing to use as a reference. Add up all costs payable with any new lender i.e. the arrangement and administrative fees. Legal fees should also be added on, these will vary depending on where you go and the value of your property.
Armed with these facts and figures you should then weigh up whether remortgaging will benefit you, whether the long term savings will outweigh the immediate costs of remortgaging.
James Copper enjoys writing on areas of personal and commercial finance. He works for www.adderson.com
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