The Pros And Cons Of Bad Debt Remortgages

Pro – Consolidation Options

One of the most common reasons to take out bad debt remortgages is to consolidate debt - and this is still possible. If you have debts and think it would be to your advantage to include the debt into your mortgage, talk to your adviser. Although times are tough any adviser will try and help you consolidate debt into bad debt remortgages.

Con – Higher Rate

There is a chance that taking out bad debt remortgages will lead to a higher rate. Because there is less lending and less credit about, banks have had to put rates up in an attempt to make a profit, especially on bad debt remortgages. But there are still affordable products out there. It just takes some looking.

Pro – Stability

If you are unsure about the future, bad debt remortgages will be able to give you some stability and some security. You can be sure of a few more years refinance, even if you have debts. And that’s important – if you are sure of your mortgage you are in a better position to begin turning your finances around.

Con – Tighter Credit

Because banks are unhappy to lend at the moment, they want to limit risk. This means they have put up their credit limits, turning away more people, which makes bad debt remortgages all the harder to get hold of. But there are still options if you have a good stream of income, equity and a good recent financial history. Bad debt remortgages are not just for those who have lots of debt now, they can work for people that have had problems anytime in their life.

Pro – Chance Of A Better Deal

Maybe you have been struggling on your lender’s standard variable rate, so taking on bad debt remortgages could well give you a better deal. Maybe you have been crippled by fees or extras – taking out new bad debt remortgages can get rid of all them for you and give you a fresh start.

Con – Lower Loan To Value

Lenders now need more and more equity in the property. This means the days of 100% mortgages are over. Lenders need security and they need to know that the bad debt remortgages have some collateral. This means if you want bad debt remortgages you may have to have a good deal of your home owned by yourself.

Although there are bad debt remortgages pros and cons, ultimately the only one who can help you decide whether it would be a pro or a con to take out some refinance is a broker. Talk to one today and see if your pros outweigh the cons.

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