How to Remortgage If You Have Damaged Credit
When an individual has a poor credit score, they often feel that qualifying for a mortgage in the UK is something that will never happen. While that will be the case for some people, others can still land various mortgage options for homebuyers even with this unfortunate credit rating. Remember, there are ways to remortgage if you have damaged credit.
Improve Your Financial Standing
- When mortgage lenders decide whether or not to extend a home loan to you, they often look at your credit score. In fact, they rely heavily on whether or not you are qualified for a home loan based on this -- as your rating usually reflects just how well you have dealt with credit previously. While not always right, your past tends to prove as a predictor for how you'll handle repayment in the future.
- Even if you have a bad credit score, you can always improve it. There are ways to raise your score, way before you even think to apply for a mortgage loan. All you need to do is improve your financial behaviour.
- For some people, it may take a few months, while for others it could take a year. However, once you get your credit score up a bit, you can qualify for the lowest interest rates possible on a conventional loan.
Show you’re Capable of What They're Looking For
- For those in the UK with a particularly damaged credit, the best way to remortgage is by making reliable payments on any sort of financial product, whether that is an automobile loan or home loan.
- These sorts of lenders want to see that you are able to make payments consistently. In the end, it's not the amount you're putting down that matters, but that you're putting down any money at all.
- Similar to this, if you have a steady income coming in, that will help you remortgage.
- Mainstream borrowers in the UK, though, can expect a whole slew of mortgage options, even when they're facing damaged credit. For starters, there are variable mortgages, tracker mortgages and fixed mortgages.
- These types of mortgages provide very similar coverage to what you would see in the mainstream mortgage market.
- In the UK, those looking to remortgage with a low credit rating tend to opt for fixed rate mortgages. That's because even if their interest rate changes at any point, the payments they'll have to make will remain the same over a period of time. This is ideal for those with low credit ratings in the UK, as interest rates often raise little by little to a percentage as high as 11%.
- Another thing that you can do is to consider the different options financial institutions offer. Use a remortgage payment calculator to help you determine whether the new amount to pay is more affordable.
Even if you feel that your damaged credit is holding you back from getting remortgaged, know that you are not alone. There are options out there that will help you receive the mortgage you deserve, even if your credit score says otherwise.