Lenders of Problem Remortgages

There are a growing number of lenders who will consider applications for problem remortgages. This is an indication of the growth in the problem remortgage market over the past few years, which has been largely consumer driven.

Problem remortgages are also known as the non-standard, credit-impaired, or sub-prime mortgages, and the lenders are known as specialist lenders.

Many specialist lenders are subsidiaries of mainstream lenders and are established under different names. This means that although applicants will apply for problem remortgages through a sub-prime lender, the reality is that their remortgage may be underwritten by a subsidiary of a high-street lender.

Specialist lenders will assess the facts of each problem remortgage case and, if the application is successful, offer a remortgage with fees and charges appropriate to the level of risk involved.

The level of risk will usually be deemed higher than standard remortgages and, as a result, interest rates and other charges will also be higher. Due to the competitiveness of problem remortgages these days, applicants with only a light adverse credit history will probably be offered terms and conditions that are almost the same as those attached to prime mortgage products.

Specialist products are competitive and loan-to-value ratios have been rising to reflect the strength of the property market, meaning that a smaller deposit is required. No deposit will be required for problem remortgages anyway because the borrower will already own the property.

Non-standard lenders will usually take the view that problem remortgages are only used by the borrower for several years while they repair their credit history. After it has been fixed, the borrower should be in a better position to apply for a standard remortgage product with a more competitive interest rate.

It usually takes between three to five years of consistent loan payments before a credit file is repaired and an applicant can apply for a standard remortgage product.