The term adverse credit remortgage refers to a second (rarely a third) mortgage on a mortgaged property that has been secured due to poor credit rating. An adverse credit remortgage is sometimes the only option available to people with poor credit rating, facing bankruptcy or CCJs (County Court Judgements). Although adverse credit remortgage has been criticized by many people, adverse credit remortgages help home owners gain access to much needed funds...
There are a lot of myths and half truths when it comes to adverse credit remortgage, listed below are some of the most popular myths:
Myth 1 - Adverse credit remortgage incurs high interest rates
This myth is only partially true, adverse credit remortgages do have a higher interest rate than regular mortgages, but mortgages by nature are comparable to a secured loan. The reason why the interest rate is higher is because there is a slim chance that the home owner will slip up on the payments and the risks involved are a little higher (when compared to a regular mortgage). Depending on the organization, a typical mortgage can incur an APR (Annual Percentage Rate) of 6-7%, where as an adverse credit remortgage can incur and APR of close to 8%. It is important to remember that the interest rates may vary depending on the existing mortgage and credit history.
Myth 2 - Having bad credit does not effect an adverse credit remortgage
Although an adverse credit remortgage is designed to aid people with poor credit history. Finance companies do do a thorough background check before approving adverse credit remortgage. Everything from the credit history to the existing mortgage details are checked before finalising an amount and APR. The good news is, most financial companies are fully aware that the individuals they are lending money to are experiencing financial difficulties, thus the credit rating and other parameters are not as stringent when compared to a regular mortgage.
What is equally true is that not all people applying for adverse credit remortgage can find a suitable deal and sometimes it requires the expertise of a mortgage broker to help people find what they are looking for.
Myth 3 - Adverse credit remortgage is complicated and difficult
This myth is only partially true. It is difficult to get an adverse credit remortgage when compared to a regular mortgage, but there are numerous mortgage firms that specialize in helping people get adverse credit remortgage. In addition, larger financial organizations have streamlined their remortgage process to allow people with adverse credit to apply for remortgage too. Today, a person looking for adverse credit remortgage can log on to the internet and get adverse credit remortgage quotes at the click of a button. In addition, Modern mortgage firms take care of every aspect from the paperwork to third party inspections.
Contrary to popular belief, people that want to apply for adverse credit mortgage can choose to do so on their own, however the immense paperwork and technical know how involved usually requires an experienced mortgage broker.
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