A remortgage and adverse credit in the same sentence at first sounds like a conundrum. Most prudent lenders find the situation of lending to a 2nd bad credit mortgage as adding too much risk to their portfolio. Never-the-less options are available on the market for individuals with adverse credit ratings to secure a loan and remortgage real estate holdings.
There are some lenders that provide these adverse credit remortgages in the form of debt consolidation loans. For example, take for instance you are you are looking to secure a loan for remortgaging your home but adverse credit is causing your application to be denied. While most reputable lenders will indeed turn you down, there are those lenders specializing in these types of adverse credit remortgages, while at the same time addressing the adverse credit situation.
Who Do I Approach?
Financial situations vary considerably for individuals and there are often a variety of reasons a person may have adverse credit, but remortagaging a home may help alleviate some of the financial strain. For starters, a mortgage may have been taken out on the home a considerable number of years back. In the last ten years along there has been some major changes to the mortgage industry itself and that alone may provide sound financial decision making towards refinance. The industry has evolved to offer has modern products offering flexible mortgage products affording individuals the option to structures payments to best account for their financial ability. These types of options of course are especially convenient for the self employed (originally marketed to small business owners) seeking a adverse credit remortgage.
So how do you know if an enlisting the help of an adverse mortgage lender, should be part of your efforts in applying for a refinancing? A quick assessment of your financial management and a review of you credit history will provide you with indicators that such an option should be considered.
What Indicators Will Be Assessed?
Your first step will be to secure your credit history and ratings from all three major credit bureaus, along with you FICO score. Your best approach is to be well prepared before meeting with an adverse mortgage lender affording you the option to negotiate the best rates possible when a deal is proposed. However, let’s not get ahead of ourselves here. First you will want to make sure that all information listed in your credit reports are up to date and current, including employment, addresses listed and both negative and positive sources of credit. Any inaccurate information found should be disputed before you more forward with your application process.
You should also take into account how often you have changed residences in the last three years. If you cannot demonstrate consistent living arrangements, then an adverse mortgage lender may assign a higher risk rating to your mortgage application and may even deny it for that same reason. Consistency and stability both lend weight to your credibility and character, thereby improving your credit score and favor with adverse mortgage lenders.
Understanding Adverse Credit
You will need to review the number of credit cards and loan contracts you have entered into – and assess the history of those accounts in relation to payment history. Each year, the average consumer will fall behind on at least one credit card or loan payment, however if this is shown to be a consistent pattern the habit will raise red flags with any adverse mortgage lender – and may very well result in your application being declined. An assessment will also be made in regards to the number of credit applications submitted in your name, and it is critical to keep that number to a minimum.
You credit report will also expose dire credit issues such as bankruptcy. Such issues may not keep you from qualifying for a mortgage, but may certainly impede your progress. In such circumstances you may be qualified, but your rates for the loan will be considerably higher due to the undertaking of risk exposed to the lender.
However, the fact remains, enlisting the help of an adverse mortgage lender could very well be the best alternative in managing your financial situations. If you have accumulated debt on a number credit cards, finance agreements and such, keeping up with such payments may become a hardship. Instead of risking financial disaster, discuss with an adverse mortgage lender the potential of remortgaging and consolidating your debts all in one payment with a lower interest rate.
Despite adverse credit situations, there are willing lenders who are in a position to take on such risk. You can leverage the loan to adequately manage your finances and the exercise your option to switch to a lower interest mortgage after about five years of making timely payments as stipulated by the agreement.
- How to Get a Mortgage Modification?
- How to Remortgage Your House?
- How to Refinance a Mortgage?
- How to Get Pre-approved for a Mortgage?