Can a Bad Credit Mortgage Be Used to Consolidate Debts?

Why People are Refused Credit?

When a person has been refused credit, there are likely many reasons for this person getting denied credit. One of the main reasons is that the person has likely not been able to get credit is that they have not paid some of their other bills on time. When a creditor sees that a person has not paid their other bills on time, which is a major issue for which the creditor will not be willing and able to take that risk. The most important thing that the person can do in order to improve this situation is to make sure that they are paying their bills on time. After a certain period of time, paying your bills on time will begin to show up in a positive way on a person credit report. While paying bills on time is very important, there are other reasons why people are refused credit. The amount of time that a person has had credit can have a major impact in weather a person is able to get the credit that they need or not able to get it. When a creditor looks at a person’s credit report, when they see a person that has established credit for a long period of time, that reflects well. Having only a short period of credit history could definitely be a reason why credit was not extended to a person. From time to time when people will apply for credit, the bank would like to see a person put down some money. If a person doesn’t put down some money, that could be grounds for a person to be denied credit. The good news though is that if a person gets denied for credit, there are steps that can be taken so that in the future the person can be approved for credit.

The way to Find the Best Adverse Credit Remortgages

Bad Credit Remortgages can be described as specialist domain of of the mortgage market, and you can’t come up with as many web based sites that are able to provide you with an immediate verdict. Nevertheless, if your home has not in the past been repossessed and you have no history of bankruptcy, then you may track down various web based mortgage comparison websites that will quote for Bad Credit Remortgages.

Whilst you’re unlikely to find the deals available to you are quite as appealing as to those people that have the best credit ratings, there will nevertheless be various pleasing mortgage offers you can buy.

Another method is to have a chat with a FSA- regulated Mortgage Advisor, who usually have understanding of which firms supply highly eye-catching Bad Credit Remortgages and would consequently be well positioned to locate you the perfect mortgage offer. That said, do please remember to print off and bring along the best Bad Credit Remortgage specials which it is possible to come across with the comparison internet sites, as it will motivate the Mortgage Advisor to work tirelessly on your behalf to equal or better these proposals.

Are there any downsides to adverse credit mortgages?

There are no real downsides but you would usually find that interest rates are higher than those of high-street lenders. The higher interest rate reflects the increased risk taken by the lender in lending to someone who has had previous financial problems.

Redemption penalties do exist obviously exist but they are coming more into line with other products and are becoming less of an issue. Many lenders are offering fixed rates that are only marginally higher than high-street prices.

When An Adjustable Rate Mortgage Isn’t Financial Suicide

The credit crunch has made borrowing unfashionable and I’m sure I will be viciously attacked for this, but yes, the much-maligned adjustable rate mortgage does have a place in post-crash society!  That’s not to say you should run out and take out an adjustable rate mortgage, however.  Like anything, there are pros and cons to consider before making a final decision.

These mortgages were severely abused throughout most of the decade, but that’s no reason to throw the baby out with the bathwater.  The average adjustable rate mortgage carries a lower initial interest rate than the average fixed-rate mortgage, at least before the first adjustment, potentially saving you thousands.  And if interest rates happen to fall, your payment could actually end up decreasing rather than increasing.  Of course, the opposite is true if rates go up.

Here are some situations where taking out an adjustable rate mortgage is okay and unlikely to cause you permanent financial harm.

When An Adjustable Rate Mortgage Could Make Sense

• You Can Afford The Worst-Case Scenario – This is rule #1, and by far the most important.  If you aren’t absolutely certain you can afford the worst-case scenario should things not work out as planned, you can’t afford an adjustable rate mortgage.  Period.  Fudging the numbers here could lead to disaster.
• You Have Excellent Credit And Ample Cash Reserves – If you have mediocre credit, you might be unable to refinance into a fixed-rate loan if events turn against you.  Ditto if you don’t have ample cash reserves to put up a sizable down-payment.  If your financial position is borderline, stick with the safety of a fixed-rate mortgage.  It’s simply not worth the risk.
• You Plan To Sell Before The Loan Readjusts – If your ARM is set to reset in 5 years and you plan to sell (or refinance) within 4 and are confident of your ability to do so, it probably makes sense to go with an adjustable rate mortgage assuming you can get enough of a rate discount to justify the trouble and refinancing costs.
• Interest Rates Are High And You Expect Them To Decline – This probably doesn’t apply right now, but in general, refinancing a fixed-rate mortgage is expensive (beware co-called “no cost refinance ” loans).  If you think rates are heading south (not easy to predict), you can save yourself some refinancing costs by riding an adjustable rate mortgage down rather than having to refinance.  This is an admittedly risky endeavor, but if you have the ability to take on a bit of risk for a sizable return, why not give it a go?

When An Adjustable Rate Mortgage Is A Bad Idea

• It’s The Only Way You Can Afford To Buy – If you can’t afford a fixed-rate mortgage, you can’t afford to buy a home.  Period.  Stretching yourself so thin is a recipe for disaster.
• You Can’t Afford The Worst-Case Scenario – What if interest rates skyrocket?  If you can’t afford your loan’s maximum rate, you will probably lose your home.
• When The ARM Rate Doesn’t Offer Enough Of A Discount – I’m not sure there’s a fast rule here, but you should demand a sizable discount for the added risk of taking on an adjustable rate mortgage.  A discount of 0.5% probably isn’t worth the risk whereas a discount of 1.5% probably is.

Before You Remortgage

Part of getting ready for your bad credit remortgage is to take a close look at your credit reports. You should do this at least one month ahead of time. The reason for this is mistakes. Credit score reports often have mistakes: they’re not reporting payments you made, reporting open loans that you paid off or, worse, reporting delinquent loans you never had. 

The above are requirements for any mortgage and remortgage not just a bad credit remortgage. And though everyone should be ready from the beginning, bad credit remortgage borrowers are more affected if they’re not. If you have bad credit, variations in what’s required to remortgage (any new rule, a slight increase in interest rates) can make it impossible for you to remortgage. The readier you are, the faster you’re done.

Is An Adverse Credit Remortgage Worth It?

Owning a home doesn’t necessarily provide the security we all believe it does. While purchasing your first home can be a wonderful and exciting experience, realizing you are having trouble meeting your monthly mortgage payments is disheartening, stressful, often embarrassing and very difficult to recover from. It is a very unfortunate reality of life, especially in the current times of an unstable economy and job losses being at an all time high. One thing that can make this situation even more troubling is if you have a poor credit score. Many lenders won’t be interested in helping you as you prove to be a high risk for them. However trying for an adverse credit remortgage could be your last option.


Don’t be mistaken in thinking these bad credit remortgages are an easy option, far from it. While obtaining a remortgage when you have a good credit score, regular income and decent equity in your home may be relatively easy. Applying for an adverse credit remortgage certainly is not. As previously mentioned, many lenders will simply not give you the time of day and turn you away because of your credit score alone. Regardless of your current situation or income, they don’t want to know you. There are however companies out there that actually specialize in remortgages for those with poor or adverse credit scores. They can offer a little more understanding and tend to look at the big picture, mainly your current income and what you can provide as security for the loan.
Finding companies that can offer you a bad credit remortgage is the first difficult step in the process. There are far more lenders out there looking to take advantage of those in difficult financial situations than there are those willing to help you. The cowboys of the business will often want you to sign over the deed to your home, pay exorbitant fees upfront with no logical explanation and provide little moral consideration for your overall financial position. Unfortunately they prey on people during a time of weakness when often it is easy to give in to short term relief. If you get even the slightest feeling someone is offering you something that is far too good to be true, run a mile. Remortgages with adverse credit are very hard to obtain so if it seems too easy, there will be a catch, you just aren’t aware of it yet. Stick with well known companies who you can find solid information and feedback on. Always visit them in person and if in doubt get a second opinion from a trusted friend or even better, a financial expert.
Once you’ve found the right company to work with and who is willing to offer you an adverse credit remortgage ensure you read the contract thoroughly; don’t make any hasty decisions simply because you’ve found someone who may be able to help you. Even the good guys will have some difficult clauses in their agreements because of your credit history. Pay particular attention to interest rates and are they fixed for the term of the loan, penalty payments, required deposit payments, ownership details, unusual stipulations and any mandatory insurance charges. You may already have insurance that covers your mortgage and you don’t want to be paying for the same insurance twice. Ask a lot of questions and don’t be afraid to ask them to explain any part of the contract that you don’t fully understand.
If you have equity in a home but suffer from a poor or adverse credit score then an adverse credit remortgage could be what helps you dig your way out of trouble. It’s not a quick fix and can be incredibly hard to obtain, but if you are out of options maybe this is the one that will work for you.

What is an Adverse Credit Remortgage

An Adverse Credit Remortgage is the process of paying-off one mortgage, from the proceeds of a new mortgage (i.e. remortgage), using the same property as security, even if you have adverse credit difficulties. An adverse credit remortgage may be just the right solution for many people.

The benefits of an adverse credit remortgage include saving money by having a fixed rate remortgage or discount remortgage rate, debt consolidation on existing credit or raising cash for home improvements, a new car, business etc., or a combination of any of these benefits - even with adverse credit problems.

It is also very important to consider the implications of an adverse credit remortgage. Firstly, this will place your home at risk if you are unable to keep up repayments on your mortgage. Secondly, you should also be aware of the costs involved with a home remortgage, and you should weigh-up these costs, such as a property valuation on your home, legal costs and fees; against the overall costs if you were to take no action.

Who Needs An Adverse Credit Remortgage?

Other people who might want a remortgage and adverse credit mortgage are those who have had problems with credit in the past. A poor credit history can result from a number of circumstances. Illness may make it difficult for you to meet payments on time. Divorce may halve your household income but still leave loans and bills to be paid. Circumstances like these can result in someone acquiring a credit history that includes arrears, County Court Judgements (CCJs), individual voluntary arrangements (IVAs) with creditors and even bankruptcy.
Luckily, this should not stop you from getting a remortgage and adverse credit lenders are quite plentiful these days. They range from the specialist arms of well known banks and building societies to stand alone lending firms that specialise in this area. Getting a remortgage and adverse credit loan does not mean saying goodbye to the perks that standard remortgage customers get. Indeed, you can apply for a remortgage and adverse credit mortgage lenders may still offer free valuations and legal services or cash back deals.
When you get a remortgage and adverse credit lenders offer a deal, expect to pay a bit more than for a standard mortgage. This could be anywhere from one to five per cent more, though many lenders also offer initial discounts on adverse credit loans. Watch out, though; at the end of the discount period you could find your payments increasing by as much as 50 per cent, which could be a big shock to both the system and the pocket.
One way to approach getting a remortgage and adverse credit loan is to check with a professional mortgage broker. The broker will have access to a range of deals and can identify the ones that best match your financial circumstances. Then you can get the best remortgage and adverse credit deal.

Bad Credit Mortgage Advice

If you need a bad credit mortgage, then you should find someone who can give you independent, professional bad credit mortgage advice.
Finding the right mortgage is hard enough when you have a good credit history. If you need a bad credit mortgage, it can be difficult to know where to start. Although growing, the bad credit mortgage market is smaller than the standard mortgage market, and many of the lenders are specialists and so may be harder to research. For this reason among others, it is usually advisable to speak to someone who has experience in this field and can help you to find the best deal possible.

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