Bad Credit Remortgages – 3 Good Results
Posted By tsauthor on May 23, 2011
Dan M. Kennedy
Bad credit remortgages are, obviously, available only to those people who have bad credit and equity in their home. Moreover, bad credit remortgages cost more than good credit ones. That said, for some people with bad credit remortgages are a way to a better financial standing and better credit.
When you remortgage with bad credit, you’re going to be accept higher interest rates. However, there are situations when a bad credit remortgage is, overall and despite the higher interest rate, the cheapest option people have. Which means you should seriously consider a remortgage even if you have bad credit.
As remortgages use your home as collateral, you do put your home at risk when you remortgage. So, don’t do it if you can’t make the minimum payments. You’re better off defaulting on a credit card or two than losing your home to foreclosure. Now that that’s out of the way, the 3 reasons why bad credit remortgages are a good option:
1. Unsecured loans have higher interest rates than secured ones. Your remortgage loan is a secured loan. So, consolidating unsecured loans into a remortgage saves money. In addition, every time you consolidate loans, the minimum payment on the new loan is lower than the minimum payments of the loans before consolidation. If that’s not enough, it’s easier to make your payments on time if you have fewer loans to track and pay.
2. You can get higher credit scores. Once your minimum monthly payments are lower, it will be easier to make payments on time and the consequence, over a few months, will be higher credit scores. Higher credit scores will mean lower interest rates. This days, depending where you live that also means lower auto insurance premiums and, some times, whether you get a job or not.
3. If there’s lots of equity in your home, you can get your hands on a lot of cash. Getting cash by remortgaging costs less than getting cash from a credit card or many other ways. So, if you really need the money, remortgaging is the way to go as it costs you less.
Before I tell you to go get a remortgage, let me ask you to consider carefully the costs, both short term (closing costs) and long term (interest over the life of the mortgage loan).
Most people don’t take into account the cost of the loan over the life of the loan. So, figure out how much interest you would have to pay till you paid off all your loans if you made minimum payments only. Then figure out how much interest you would have to pay till the remortgage loan is paid, not forgetting to account for the closing costs.
The only people who should get a bad credit remortgage regardless of costs, are the ones that cannot afford their minimum monthly payments but would be able to afford the new (remortgaged) minimum monthly payments.
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