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There are several reasons why you might be in the market for a bad credit remortgage. You might be wanting to try to lock in a lower interest rate, or perhaps you simply need to use the bad credit remortgage as a way to consolidate some of your debts.
Regardless of your reasoning, securing a bad credit remortgage can sometimes seem like a daunting task… in the end, though, its usually much easier than you might think.
Defining bad credit
If youre looking for a bad credit remortgage, then you already know (or at least have a suspicion) that your credit is less than perfect.
If youre like a lot of people, though, you might not be exactly sure what this means or how credit is determined.
Your credit rating is a numerical score thats given to you based upon reports from your previous creditors, who are the people who have issued you a credit line or a loan in the past.
If youve made your payments on time, then they send in a positive report and your credit rating goes up.
If youve missed payments or defaulted on your debts (meaning that you didnt pay them back), then they issue a negative report and your credit rating goes down.
The lower your credit rating score is, the more of a risk its considered to lend you money… after all, if youve had problems repaying your debts in the past then its reasonable for lenders to thing that theres at least a decent chance that youll have those same problems in the future.
This makes it much harder to get loans and credit offers, and the ones that you do get usually have much higher interest rates and require some form of security deposit or collateral.
The bad credit remortgage
A mortgage is a special type of loan, used to purchase a home or other real estate and using that same property as collateral for the loan.
The mortgage lender has a legal claim to the property, so if you fail to repay your loan then they can repossess and sell the house or real estate.
A bad credit remortgage is a mortgage loan designed for people with lower credit scores, and is issued on property that you already own (and may or may not still have a mortgage on.) Since the house or real estate serves as collateral, youre more likely to be approved for a bad credit remortgage than some other loans… meaning that the bad credit remortgage can be used in the place of the loans that you werent approved for.
It can also be used to restructure payments on your previous mortgage (since the new loan pays off the old one, and is for a lower total amount) and reduce monthly payments, usually with a slightly lower interest rate.
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About The Author
John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the www.directonlineloans.co.uk website.
Article Source: EzineArticles.com