Remortgaging as the name suggests means to create a new mortgage on a preowned property. What this means is that either you create a mortgage on property that you already own, replace the existing mortgage if any or borrow money against the property. Before moving towards the intricates of remortgaging it is important to understand that remortgaging or mortgaging for that matter is a big financial commitment. So, you should plan it out with a careful thought. One would onlyswitch to a new mortgage contract if it saves money. If you are the kind of person that spends time looking for discounts in order to save every hard-earned penny of yours, remortgage is the perfect plan. Mortgage can cost up to thousands of dollars each year hence if you find a better deal it can save you a ton of money that you can spend on other leisure items. Plus, why pay extra for the same property when you know you can find a better deal?
Apart from saving money there are a ton of reasons that can lead you to remortgaging. To begin with, the current deal is about to end. A major dilemma while renewing the mortgage is that one has to face increased interest rates. How this works is that the lender puts you on SVR (standard variable rate) which is usually higher than both, your previous rate and best offers. Since you are out of time and have to renew it immediately you agree to pay for a higher rate.
If you want to avail a mortgage that allows you to save money or you want the new contract to be on a lower rate than the previous one it is advised that you start looking for new deals 12 weeks prior to the date when your mortgage ends. This would not only allow you to get the best contract but would make the transition hassle free.
Another major reason for remortgaging is overpayment. Many mortgage plans are very restrictive when it comes to overpayment or paying more than the prescribed payment plan. Let’s suppose that your boss is very happy with you and you are granted a raise. Now you are financially stronger than before and want to quickly repay your mortgage but your payment plan would not allow you to do so. This is where remortgaging comes in. You can subscribe to a new mortgage deal that decreases the loan size and helps you to pay back faster. But it is not as plain sailing to switch a mortgage as it sounds. There is an exit fee or admin fee that you need to pay before switching to a new mortgage. Thus, switching mortgage is only feasible if it provides a comparative advantage.
Lastly, more borrowing. Supposedly, you want to borrow more than you had agreed. Now your lender allows you to do that but the terms or rate offered to you is not favorable. Mortgaging to a new lender would allow you to raise that extra money. So, it’s a win-win. But keep in mind you still have to pay the exit fee.
An important underlying assumption in the aforementioned scenarios is good credit line. A good credit line always helps with the process of mortgage. Rather it is safe to say that good credit score always saves the day. This brings us to the question that can remortgaging be done with bad credit? To answer this, it is better to revisit the definition of bad credit first.
Bad credit in simple terms means that a person has a history of not begin able to pay his/ her bills timely. This history plays an important role because it helps analysts to predict either the borrower would be able to make payments for the loan in the future or not. Low credit score is also a reflection of Bad Credit History. On a scale, which is from 300 to 850, low credit score is anything under 580.
Fortunately, or unfortunately, credit score is seen as one of the merits for lending. If you have a good credit score loans would be readily available for you. Coherently, if you are inconsistent with credit payments or have a low credit score, it is difficult for you to attain loans.
Nothing is impossible in this world. Same is the case with remortgage with bad credit. However, there are a number of considerations that you need to make in order to remortgage with bad credit. Initially, what you need to do is sum up all your previous loans and make a monthly payment plan for them. This would allow you handle your financials more easily and would ensure that you pay the amount. This would also allow you to understand how much of money you are left with so that you can pay the mortgage accordingly. Moving on, it is extremely vital for you to comprehend that can you make payments for the entire payment plan or not. Missing a payment would result in late payment fee and also deduction in credit points. Bad credit also results in high interest rates because it involves high risk for the lender. Thus, you should always compare the deals you are offered and chose the one that offers the lowest interest rate among all. It is also essential for you to understand all the details of your mortgage such as application fees, variable mortgage rates and extra supportive feature such as payment holidays. We at Independent Mortgage Lenders, can provide you with Free Mortgage Advice. Our mortgage advisors would provide you with the best deal feasible for you. Our team of highly skilled individuals is always at your disposal.
Here are some added tips by our advisors for increasing credit score;
1. Sustain timely bill repayment schedule.
2. Reduce credit utilization to bare minimum.
3. Have legal consultation for better credit score.
4. Regularly update and check your credit file for errors.