How to Get a Remortgage with Bad Credit

Having bad credit on your credit report does not mean you are incapable of getting a remortgage. The good news is that it is possible for a person to refinance even though your credit has taken a turn for the worse. Despite it being possible for someone to get a remortgage while having bad credit, you need to certainly know that the process won’t be that easy in comparison to someone who has good credit. The fact of the matter is that getting a remortgage with bad credit is harder and results in difficult situations like customers being treated badly by the lending companies that hardly understand the customer’s circumstances. There are times when people who are interested in getting a remortgage with bad credit are misinformed, and the lenders tell them that is not possible do whatever they want. Having the right information about mortgages and remortgages will make you stand a good chance of getting a loan from a lending company or a broker.  In this article, we discuss on some of the things you need to know before getting a remortgage with bad credit.

Get FHA Approval

Home mortgages are usually not available to homebuyers that have credit problems; this is because they present high risks for the lenders.  FHA (Federal Housing Administration) can, however, help aspiring homeowners who have low credit scores to get a remortgage. You need to know that FHA does not lend money; however, it acts as a form of insurance for lenders.  FHA gives a guarantee to the lenders that it will pay on your behalf to the lender or broker even though you have defaulted on your mortgage. FHA will improve your odds of getting your mortgage application to be approved.

Boost your Credit

If you are a person who has poor credit, try and boost your credit score to stand a chance to get a mortgage. The process of boosting your credit score may take long; however, even the smallest increase in your score can make a big difference in your chances to receive a loan. The first step you need to take when interested in boosting your credit is by first ordering a copy of your credit score. Order the copy of your credit score from all three bureaus Equifax, Experian and TransUnion. When you have the copy of your credit score, check for any inaccuracies.

Make High Down payments

Making high down payments can increase your chances of getting a loan from a lending company or a broker. Lenders will always need assurance from you that you will pay back their money once they give you a loan. This means that the more equity that there is in the apartment you purchase then the easier it is for the lenders to give you a remortgage. If you lack enough cash for making the high down payments, you can ask your friends or relatives to help you. The money you receive from your family or relatives needs to be a gift, not a loan. To prove this, you will need a “down payment gift letter” to prove to the lending companies.