If you’re browsing the web for information on bad credit remortgages and wondering whether they’re right for you, you’ve come to the right place.  Let us start by defining what they are.  Bad credit remortgages (also known as adverse credit remortgages) are home loans designed for people with bad credit whereby they take out a new loan  against their home from a new lender to secure a better deal with a lower interest rate, lower their monthly payments, consolidate their debts, and/or raise money from their equity in their home.  A bad credit remortgage should not be confused with a “second mortgage”.  When you “remortgage”, your new loan pays off the old loan so there is still only one loan against your home.

It should probably come as no surprise that remortgaging to get better interest rate is going to be quite difficult if you have bad credit, particularly from mainstream lenders.  In fact, if this is your aim it may be wiser to simply work on improving your credit rating before applying.  But if you’re looking to pay off all your debt, stop your home from being repossessed, or raise money then a bad credit remortgage could be the answer.  One of the key benefits of remortgaging is that you have a great opportunity to improve your credit rating.  It lets you pay off all your other debts and start off fresh with a new lender.  Another benefit is that as housing prices rise, you can take advantage of the increased value of your home.  By remortgaging at your home’s current market value, you can pay off your old loan and then keep the difference.  Moreover, if you currently have an interest only loan, you are not paying anything towards your principal unless you pay extra each month – in that scenario, it may make sense to remortgage because you could otherwise never own your home.

Before you apply for a bad credit remortgage, there are a few things you need to do and keep in mind.  Firstly, you should get your credit reports from all the major credit bureaus and make sure that there aren’t any errors.  If there are, you should get them corrected so that your credit reports reflect your true credit rating.  You should also avoid missing payments so that your credit rating doesn’t deteriorate further.  It is also a a good to shop around for lenders which specialize in offering remortgages for people with bad credit.  Try to find a lender that will offer you an initial low fixed rate.  When receiving quotes, however, bear in mind that if you are offered a very favorable introductory rate it could be that it is based on interest only and once  the initial period expires, you could be charged a very high interest rate (perhaps even double).  Make sure you know exactly what your rate and payments will be and that you’re comfortable making your monthly payments at that rate.  It is also a good idea to make sure you can exit early if needed without penalties.  There may be fees called “redemption penalties” for leaving during the introductory period.  Sign the dotted line only if you are 100% comfortable and committed!