What is Adverse Credit Remortgage?


Mortgage is a common word to us. When we need money but we do not have any money source, we have to mortgage something to a lender and get the money for a certain time. It is just a process to giving the security of payback. In most jurisdictions mortgages are strongly associated with loans secured on real estate rather than on other property (such as ships) and in some jurisdictions only land may be mortgaged. A mortgage is the standard method by which individuals and businesses can purchase real estate without the need to pay the full value immediately from their own resources.

What is Remortgage? A remortgage (also known as refinancing) is the process of paying off one mortgage with the proceeds from a new mortgage using the same property as security. The term is mainly used commercially in the United Kingdom, though what it describes is not uniquely British. Often the purpose of switching is to secure a more favorable interest rate from a different lender.

What Is Adverse Credit Remortgage? Adverse is defined as opposing, or against (let’s just say bad). Credit is the time allowed for payment. Adverse Credit Remortgage is one where a person that has not used credit wisely in the past (has judgments against him or a bankruptcy) and therefore has a bad credit rating (shown that he can’t be trusted) decides to sign a new mortgage on the existing property and pay off the old mortgage with the funds.

The term is most often used in the UK, but the concept is common around the world. In the United States, it is most often referred to as refinancing.

Why you should get this remortgage? There are several reasons why an existing mortgage borrower may wish to remortgage and consider switching to another lender such as:

  • To release equity, taking advantage of house price increases.
  • Debt consolidation, paying off expensive loans and credit and store cards.
  • Buying out a former partner.
  • Looking for a mortgage with more flexible features.
  • Securing a lower and fixed rate of interest with peace of mind for the future.
  • Looking for a lower variable interest rate.

Who can get this mortgage? This remortgage is there for people who can’t get a loan because of bad credit. Often referred to as bad credit remortgages, adverse credit loans, or bad debt loans, they are offered to anyone who has any of the following on their credit history:

  • Arrears
  • Defaults
  • CCJ’s (County Court Judgments’)
  • Bankruptcy
  • Late Payments
  • Missed Payments

How can you apply for that thing? Find adverse credit remortgages and applying for them is easier than you might think. There are a large number of online remortgage websites that specialize in adverse credit loans and remortgages and they also provide you with online application forms and information which makes the whole process much easier. All you have to do, is look for the re mortgage company that best suits your individual needs and fill in the application form that they provide.

The application form that accompanies bad debt loans and adverse remortgages will ask you about your credit score, your employment details, residential details, etc, and you will also be asked to provide proof of your identity. Once you have submitted your form to your chosen remortgage company you should be contacted by a remortgage broker who will then advise you on the right loan for your individual needs.

What should you do before getting this remortgage? If you need to have this mortgage you should:

Start looking early

It makes sense to start looking for a new deal around seven months in advance, especially if you aren’t sure of your position. However, it is worth speaking to a mortgage broker as they may advise you to wait.

Check how long offers are valid for

If you have low equity then you risk your property losing more value by waiting, so there is a real reason to secure a deal in advance. Some lenders, such as Nationwide and Abbey, make mortgage offers that are valid for six months, although many are only valid for three or four months so make sure you take this into consideration.

Take fees into account

Speak with your current lender before you start looking for a new deal. Some may be prepared to offer their existing customers a new deal even if the equity they have in their home wouldn’t qualify them for a mortgage if they were a new borrower. You can either contact your lender directly or ask your mortgage broker to do so on your behalf – some lenders have online system that brokers can access to get an instant answer.

Get ready for a valuation shock

Remember that there could be a difference between how much you think your property is worth and how much the lender’s valuer thinks its worth. The bottom line is, what the valuer says goes. But you could be in for a nasty shock so it is worth checking with local estate agents or online to get a rough idea of the value of your home in the current climate.