Getting a poor credit remortgage is not the ideal situation, but sometimes it is the only way out of a tough situation. A remortgage is often used when access is needed to any equity that has been built up in the home. This lump sum of money is usually used to pay off higher interest bills or for emergency expenses.
For the most part, a poor credit remortgage is going to have a higher interest rate than a traditional mortgage would carry. Even then, the rate will be far less than credit cards (or other rotating credits), most car loans, and sometimes even student loans.
There are some things that you must consider before you sign on the dotted line, and there are also things that you must be willing to commit to doing AFTER you acquire a poor credit remortgage, if you want the new loan to work out to your advantage.
1. Negotiate the lowest possible rate you can get. Many lenders offer the option of “buying points” to lower the interest rate. Have them work out the difference in payments with the different options. If the difference over a couple of years is more than the buy down cost, then do it. Other wise, stick to the original rate and use the extra money to pay down the principal.
2. Pay off all the bills that you can with the equity in the home and then CUT THE CARDS UP! Until the debt is paid off in full, you don’t need to add any more.
3. Seek professional help (or at least talk to someone whose financial wisdom you feel you can trust). Let them help you work out a sound budget that you will follow.
4. Pay your bills early or on time. This will help you improve your credit ratings. After five years, you should be in a position to negotiate a new loan at much better terms. Be sure that you push for the lowest rate for the least number of years. Your goal is to get OUT of debt.
Getting a poor credit remortgage can put you on the path to financial freedom. With some good budgeting and even more hard work, you could be living the debt free live you only dreamed about.
Kathryn Lang is a freelance writer covering the insurance industry. She has written various articles on
Poor Credit Remortgage, and regularly writes on
Mortgage news.
