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Credit Repair Remortgage
A credit repair remortgage is a way of repaying bad debts with a remortgage. Bad debts are a constant strain on potential borrowers and applying for future finance with bad credit registered on your credit file can be difficult - we could have the answer.
A credit repair remortgage could clear all your bad credit and instantly put you in a better position for future finance terms including mortgage and remortgage applications.
Am I eligible to repair my credit with a remortgage?
Homeowners with enough equity in their property may qualify for a credit repair re mortgage. It would stand to reason that is someone is wanting to repair their credit then they would have bad debts such as missed payments, defaults and CCJ's (county court judgments), this would mean they need to apply for a adverse credit remortgage - this is simply a remortgage product from a specialist lender that will allow an application to proceed to completion with adverse credit being registered on the potential borrowers credit file.
Adverse credit remortgage's are widely available though a number of lenders with products tailored to the credit impaired borrower. You can make a rough estimation to see if you have enough equity in your property to remortgage and repay your bad debts, we have a page just for this called loan to value that you may find useful as it explains how to work out how the loan to value you may need in order to clear everything but for completeness we have put a quick explanation below.
Example:
If your property is worth £200,000 and you have a £100,000 mortgage this would be 50% of your properties equity already spoken for by way of your mortgage. If your bad debts are £25,000 then you would need a new remortgage to cover both your existing mortgage (£100,000) and your bad debts (£25,000) which would mean a total new borrowing of £125,000. To work out the loan to value on this you would simply follow the following:
Total amount needed ÷ Property value * 100 = Loan to value %
If we use the figures above it would look like this
£125,000 ÷ £200,000 = 62.5% Loan to value
Loan to value (LTV) related mortgage and remortgage products step up in 5% increments. So whilst the mortgage you would apply for would be 62.5% LTV the mortgage product would probably be called a 65% or 70% LTV remortgage even though you wouldn't borrow the full 65 or 70% - its just the way mortgage products are, in order for the lender to differentiate products the maximum LTV they will borrow against a property steps up in 5% increments so they can have set underwriting criteria in relation to the risk involved. The higher the LTV the greater the risk for the lender.
What LTV will my new remortgage allow for credit repair?
Realistically it would all depend on your individual circumstances and your what bad debts are registered on your credit file but from experience we would recommend no more than an 85% mortgage (85% LTV) but as things are heading towards the back end of 2008 its more likely you would get approval if you needed an 80% mortgage (80% LTV) or below.
Whilst working things like this out for yourself will let you know how things work its no substitute for speaking to a professional adverse credit mortgage broker who understands the market and the products available but it is still worth working out, if for nothing else other than you know what you need prior to speaking to a broker.
You could off course let your broker work everything out for you, if they are good at what they do they should be able to explain everything without the jargon and possibly come up with a few options you may not have thought of.
