Adverse Credit Remortgage Explained:
As the name suggests, it is a second mortgage on an already mortgaged property when you are in the adverse of conditions. Confused, read on to know in detail.
What is your Credit Worthiness?
As you must already be knowing that nearly all financial institutions keep a record of its investors and lenders payments and other transactions. They maintain a credit report of every individual and often exchange information with one another. These records together add up to the ‘credit worthiness’ of an individual. The credit worthiness is a number assigned to an individual to gauge if he/she is reliable to pay up the loan which he/she has taken. Having a good credit report is always beneficial, but due to unforeseen circumstances, individual’s credit worthiness takes a beating and moves towards the bad side.
What is adverse credit remortgage?
Adverse credit remortgage is a home mortgage which has been desgined for those individuals with a bad credit report. It is usually used to pay back the existing mortgage but it may also be used for other purposes like repairs. Things look to be good so far, but on the flipside, the adverse credit remortgage terms and conditions are always inferior than on normal remortgages.
A remortgage is like a second loan on a same piece of property which a bank or financial institution is ready to give you, after closely examining the credit worthiness and the asset’s value. Adverse credit remortgages usually carry a higher rate of interest than the normal remortgages as the bank is taking a huge risk and may even have to write it off as a bad debt. If an individual successfully repays the adverse credit remortgage, then he/she is liable to an improvement in their credit scores.
Things to know when applying for an adverse credit remortgage:
While applying for an adverse credit remortgage, borrowers have to allow full inspeciton of their house and also provide all the necessary paperwork which shows that they are the owners of the property. They must also provide the various financial documentation for the lender’s assessment of their loan request during the approval process.
The processing of the request may take upto a month or even longer and during this time if the property owner may have skipped payments or be in forclosure proceedings, then the lender may not be in a position ot negotiate an adverse credit remortgage.