There are a number of reasons you might want to re-mortgage your home. It could be you need to consolidate your debts to make them more manageable or you want to take out an IVA.
You can get a mortgage with bad debt, although you will pay a higher rate of interest than normal.
Bad debt means that you have:
A County Court Judgment against you (CCJ)
This means someone who you owed money to has taken you to court. You have then repaid the debt, or you have an attachment of earnings order, a charging order or the debt was discharged by goods seized by the bailiff.
A discharged bankruptcy
You may have been forced into bankruptcy by someone you owed money to, or you have voluntarily applied yourself. Either way you will normally be discharged from bankruptcy 12 months after the order was made. It then stays on your credit record for 6 years.
A regular amount of missed payments
If you regularly fail to pay your credit instalments on time they will be recorded as late payments. They stay on your record a number of years.
A record of non-payment
If you have missed credit payments or forgotten to pay a bill, this will have an adverse effect on your credit score.
An Individual Voluntary Arrangement (IVA)
An IVA is an agreement between you and the creditor. It is legally binding. You pay your debt by instalments over a certain period of time. It is expensive to arrange, and it is overseen by an insolvency practitioner.
A debt management plan
If you take out a debt management plan, you will be making a monthly payment which is then shared out between your creditors. You need to go to a DMP provider and they will contact the creditors and make the agreement. It’s not binding, so it can be cancelled at any time.
Your Credit Record
When a lender is considering whether to give you money for a re-mortgage they will ask to see your credit record.
The record is with a credit agency. Lenders use one of the main three agencies in the UK. They are Equifax, Callcredit and Experian. Your file will contain the details of your bad credit and good. If a lender can see that you were in financial difficulties some years ago, but since then have managed your finances without a problem, this will be a benefit.
How a Mortgage Broker Can Help You
If you need a re-mortgage and you have a poor credit rating, find a mortgage broker. Don’t bother with traditional banks and building societies. They only deal with customers who have a good credit rating.
A mortgage broker can help you to apply for a re-mortgage with bad credit. They know who to contact to get the best deal for your circumstances.