How to get an Adverse Remortgage Loan: FAQs on Problem Mortgage Loans and Finding a Bad Credit Lender

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Borrowers may face problems in securing loans and meeting their needs with a bad credit score. However, lenders are competing for new business which makes it a good time to shop around for an adverse remortgage loan.

Many lenders realise that adverse circumstances happen to even the best of clients because of medical bills, divorce etc, and many lenders are not unsympathetic to these problems.

What Exactly is an Adverse Remortgage Loan?

In the UK, as far as most adverse remortgage lenders go, only IVAs, CCJs and bankruptcies in the last three years and which have not been satisfied are considered adverse credit.

For arrears, the qualifying period is two years. Most lenders use the most serious circumstances to determine what level of adverse credit a borrower has and what interest rate loading will be applied to the adverse remortgage.

The category an adverse remortgage applicant falls into depends largely on the number of defaults on loans, judgments or bankruptcy orders he or she has and what payment arrangements have been made.
What is a Problem Remortgage?

Problem remortgages are meant for homeowners who want to switch their mortgage but have a bad credit history. What the homeowner has to do is convince the lender that repayments will be met. Showing current income, an updated credit report and all documents pertaining to the loan on application will facilitate the loan process.

The biggest advantage of a problem remortgage that by applying for a mortgage with lower monthly payments, the repayment burden is eased on a monthly basis. Look for a remortgage lender with lower rates but remember to take all costs and fees into account.

The interest rates may be higher than normal mortgages and there may be some restrictions on when the homeowner can refinance, or repay the loan in full. There are many products available on the market and the the borrower should be able to find one that fits his or her circumstances.

How to Apply for an Adverse Remortgage Loan

  • The homeowner can apply for no-obligation quotes online and compare between lenders.
  • Working with a reputable mortgage broker may be the best way to go, since he or she will more than likely be a specialist when it comes to knowing what products are available on the market and will be able to negotiate a good deal on behalf of a client.
  • The homeowner may be able to negotiate with the current lender for better rates.

Remember to check all costs on the loan application before signing and think about locking the loan into a fixed rate mortgage in case interest rates rise in the future.