Interested in remortgaging your home loan, but concerned that your bad credit will get in your way? You can remortgage even with bad credit, or a CCJ or bankruptcy on file. Here are a few tips to help you on your way:
1. Improve your credit as much as possible.
Pay off old loans, and once they are paid off, ask your creditors to remove negative information from your credit report.
If you need new, positive credit listings, get a department store credit card, make a few charges on it, and pay them off in good time.
2. Arrange for a co-signer.
Talk to family and friends and see if you can find someone with a good credit rating to co-sign your loan. Be straight with them, so they understand how serious what they’re doing is.
Don’t let your quest for a good deal taint your relationship with your most valuable resource of all; your friends and family.
3. Consider whether you want to consolidate other debts into a remortgage loan.
If you are having trouble with multiple debts, you could consolidate all your debts into one loan. This could give you a lower overall interest rate, plus some extra money you can use to pay off a few debts.
However, keep in mind that because of your bad credit history, you will probably only be able to borrow up to 75% of your property’s value.
4. Consider extending your loan term.
Consider using the remortgage to extend the term of your loan. This would give you extra money each month that you could use to pay off other debts.
5. Talk to your current lender.
Depending on how bad your credit is, you may have trouble finding a high street bank that’ll take you on. Your best option is to check with your current lender to see what interest rates and charges they would offer you, before you ‘jump ship’.
6. Check out sub-prime lenders.
If this fails, try a sub-prime lender. With them, you’ll have to pay higher interest than with standard loans – typically one-to-three percent higher. However, if you extend your loan term, your monthly payment could still be lower.
7. After you remortgage.
If you end up remortgaging with a sub-prime lender and are unhappy with the interest rate you receive, remember that you can always remortgage again later.
Be sure to maintain a good repayment history and keep working on improving your credit so you will be ready to remortgage again when the time comes.
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