If you are an existing home owner with an adverse credit history and you wish to remortgage your property, you may be required to apply for one of many specialist remortgage products. Because of your credit impairments you may be excluded from applying for standard high street home loans and will therefore need to shop around.



A problem remortgage product is designed for mortgage applications which are not straightforward. This is usually because of an impaired credit history that will stop the applicant from applying for a remortgage with traditional high-street lenders.

High-street lenders normally rule out applications that contain one or more instances of adverse credit due to the perceived increase in risk in lending money them. This does not entirely rule out such applicants from the mortgage market. In fact there are dozens of lenders who will consider such cases. It does, however, usually mean that the applicant will likely be charged an interest rate that has been inflated by several percentage points to account for the increased risk.

As well as the increased interest rate, there are other terms and conditions that problem remortgage products have over and above standard products. The most notable of these is the tie-in period. Home loan products that are designed for problem applicants usually come with an early redemption penalty which can be as high as five percent of the loan balance. The charges become payable if the mortgage is redeemed during the tie-in period, which can be up to five years.

Problem remortgage product can also have hefty application fees attached. These fees are payable upon application and are sometimes non-refundable. While they can be expensive, some lenders allow application fees on this type of home loan product to be added to the loan balance. This means that the borrower will pay off the fee over time along with the balance of the loan. While this can eliminate the problem of paying a hefty fee upfront, it will increase the overall cost of the loan as interest will accumulate on the fee over time in the same way that it is charged on the remainder of the loan balance.

In the wake of the recent turmoil in the global credit market mortgages that were once targeted at credit impaired individuals are not as widely available. Lenders have been tightening their belts regarding their lending criteria and are now wary of borrowers with questionable credit histories. While suitable products are still available, many have been pulled from the market. This means there are fewer remortgage products to choose from so borrowers need to shop around or employ the services of a mortgage broker.

Once a suitable product has been found home owners with credit impairments will also need to act fast to secure the product. Such home loans are extremely popular and can disappear from the market overnight. Lenders have even pulled products from applicants while their applications are still in progress. Home owners with remortgaging problems therefore need to be diligent and do all they can to get their application completed once it is in progress.