In recent years, bad credit remortgages have become a popular choice for people looking to remortgage their property who have a bad credit history. While regular high-street banks may shy away from this type of home loan product, there are products available from various sub-prime lenders that may be suitable.

Bad credit remortgages are popular in the UK, with property owners rarely keeping the same mortgage product for more than five years. Changing products may occur for various reasons, including securing a better interest rate, freeing up equity, and consolidating debt.

The market for this type of home loan product is highly competitive. This means that lenders must compete for business by offering their best possible interest rates, fees, and other costs. Interest rates are normally higher than for “clean credit” products, but are still competitive. It is worth checking the fine print before applying for this type of product as the full scope of terms and conditions may not appear on the surface.

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Bad credit remortgages are particularly useful to borrowers who have some equity in their home and want to consolidate debts. Other forms of debt - such as credit cards and personal loans - can be consolidated into the home loan product and therefore secured on the borrower’s home. This will cause the term of the loan to become longer, however the monthly repayments on the previously unsecured debts will become smaller. This is due to a combination of the longer term in which the debts are paid off and the lower interest rate attached to the bad credit remortgage product.

Overall, the amount of money that is paid by the borrower is higher than it would be if the debts remained separate and unsecured, however, if the borrower is suffering from credit impairments and a cash flow shortage, bad credit remortgages can provide welcome relief in the short-term.

If a borrower secures a home loan of this type and keeps up with their mortgage payments each month for several years, they can help to repair their credit file and put themselves in a position to apply for standard home refinance products once again. This means that over the long term, bad credit remortgages can be used as a stepping stone to high-street home loan products with more competitive interest rates and fees.

If you are looking through the maze of products available which you suspect may be suitable for your situation, consider speaking to an independent mortgage broker for unbiased, expert advice. An independent mortgage adviser will be able to search through the entire market for bad credit remortgages and find a product to suit your personal financial situation.

They will be able to assess your credit situation based on your credit score and the history of your file and recommend the products that are suitable for your requirements. An experienced broker may also be able to negotiate with the lenders for you if your situation is borderline. This may be a better option than going it alone, particularly if you have severe impairments to your credit file.