Important financial decisions such as taking out a loan impact the quality of life significantly. Property owners who would like to remortgage should first make sure this is the best option for them. Remortgage to release equity is suitable for people who have accumulated enough equity in their home. People who are in the market for a new loan should resort to experienced brokers to avoid mistakes. Remortgage with bad credit is possible when you have a professional at your disposal.
When to Remortgage to Release Equity?
Most individuals have managed to buy a house by securing a mortgage loan. Given the fact that there are many attractive products available on the market, people want to switch to a better deal. Remortgage to release equity is a viable solution for people who need money for a certain project. By releasing equity, they increase the size of their loan and they can access an amount of money for the projects they have in mind.
Before you decide whether this is the best option for you or not, you have to see how much equity you have in your property. For example, persons who have been making payments for a loan for a long time probably have enough equity to take out a new loan. This is also the case with individuals whose property values has increased over the years.
How to Remortgage with Bad Credit?
Bad credit is a common problem for numerous individuals who have not been able to make payments for their loans as they should have. If you would like to remortgage and you have bad credit, you should know what you are in for.
Remortgage with bad credit is complicated as numerous lenders are not willing to take the risk of working with people with poor credit. Lenders view different types of bad credit situations differently; it is important to know exactly where you stand before you contact them for a new loan.
Unbiased is mentioning that “Your credit history is one of the key factors that lenders use to assess whether or not they’ll give you a mortgage, and how generous that mortgage deal may be. The good news is that lenders do offer mortgages for first-time buyers and homeowners with bad credit, and the process for getting one is similar to a ‘regular’ mortgage application.”
Why Do People Remortgage?
It is no surprise that saving money during these uncertain economic times is impossible for most people. As such, the only option they have to finance a new project is to apply for a new loan. Remortgage to release equity is very common these days among people who want to:
- Benefit from a better mortgage rate
- Consolidate multiple debts into a single one
- Obtaining the necessary amount of money to buy a new car or go on a vacation
- Making improvements to your property
Regardless of the reasons why you consider a remortgage, it is important to understand how this will affect your finances in the long run.
How Do People Get Bad Credit?
Credit history is important to lenders and you should do your best to avoid bad credit. The most severe issues that will impact your credit rating are late payments, defaults, bankruptcy, repossession, country court judgements and having an IVA. Each of these situations is viewed differently by lenders, and it will impact the type of offer you get.
Apart from your credit history, when you remortgage with bad credit, institutions will pay attention to the following:
- Your loan to value- this is given by the amount of money you have borrowed against the current value of your property.
- The amount of money you can afford to repay- to establish this, they will assess your monthly income and expenses.
- The exact date of the credit problems- for example older issues will have a smaller impact than recent ones.
- The overall situation of your finances- you have to show your lenders that you are not going through any financial issues and that you have got your finances back on the right track.
Can People Remortgage with Bad Credit?
Each person with bad credit has a different situation. The good news is that you can remortgage with bad credit provided you do your homework first. It is important to do things the right away; discuss with a professional broker first to see exactly where you stand. Obtain a copy of your credit report, calculate your LTV. Next, you have to calculate your affordability and see what you can do to improve your credit history.
Bad credit impacts mortgage loan applications, as such borrowers are considered high risk. This is why lenders will proceed with caution and ask for a larger deposit should they be willing to work with them. You can obtain a loan in spite of your bad credit, but you should work with a qualified broker to accomplish that.
Why Is It Wise to Remortgage to Release Equity?
Individuals who want to see whether they qualify for a remortgage to release equity have to make sure they meet the eligibility criteria and the assessment of affordability performed by the lender. Equity release enables you to access cash and to spend your money as you would like. Such a loan is not difficult to obtain as long as you have a steady income and you do not have problems with your credit score.
Home owners who would like to simplify this process and ensure they get the best deal for their current situation will not hesitate to work with a competent broker. Specialists in this field know which lenders have the most attractive offers for different types of loans. Also, they can help you remortgage with bad credit and obtain a suitable deal. In fewer words, you are the one to decide how you would like to approach this matter; however, you should keep in mind that working with a skilled broker can make a huge difference when it comes to the type of loan you obtain.