Bad Credit Remortgage UK.
ONE LINE SUMMARY:
The UK remortgage Market offers salvation as well as despair to bad creditors.
THREE LINE SUMMARY:
As the UK mortgage markets contract and the economy losses it lustre so remortgaging becomes increasingly hard and the number of prospective borrowers with bad credit histories increases.
Firstly the borrower must establish what counts as bad credit. In essence any history of poor credit can be regarded as bad credit by lenders especially previous mortgage arrears, non-payment and late payment of monies owing or credit cards and county court judgements (CCJs). Obviously IVA (Individual Voluntary Arrangements) and bankruptcies offer the greatest obstacle to borrowers wishing to remortgage.
Poor credit histories may well not be known by the borrower – for example a missed or late credit card repayment for Ł50 over 5 years ago – but will be recorded. In the event of an issue like this the lender will look into your history to establish the risk of the re-occurrence of non or late payment. If you are up front and honest about the circumstances the lender is more likely to deal favourably with you.
Many readers may well be familiar with the term sub-prime or the sub-prime mortgage (SBM) crisis. The remortgages that bad credit history borrowers are likely to be offered are going to be a sub prime ones. They are not intrinsically different to any other standardly available mortgage it is just that the rate is not as good as would otherwise be expected – it will however immediately improve the poor credit rating. As long the repayments are kept up for a period of time – generally at least 12 months – the borrower will eventually be entitled to remortgage to a fully standard mortgage. There will thus be more options available at this time at market competitive rates.
The best way of arranging a bad credit remortgage should be the same method of arranging a normal mortgage – use a mortgage broker. Banks, building societies and other lenders will primarily sell you their preferred product; good for them not necessarily for you. The borrower must also make sure that the mortgage broker IS a whole market broker – this means they will not just select mortgages from a small panel. If they are not whole market brokers you should walk away.
It is important to be aware of fees at this stage – the actual procurement cost for the broker should not exceed 1.5% - unless in exceptional circumstances – such as an exceptionally bad credit remortgage. Similarly many people with a poor credit history are often enticed to so called “specialist poor credit brokers”. These brokers tend to charge far higher rates than otherwise commercially available as many borrowers think that this is all they can get – in effect all brokers will be willing to deal with the vast majority of sub-primes and will do so at a competitive rate.
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