You are sitting on a mortgage with an interest rate that seems a bit high.
However, your credit report is not exactly flattering, but you would still like to remortgage and attempt to save some money on your monthly bills. What are your options?
Your credit rating will have quite an influence on a decision such as this.
If your rating is too low, it will be very difficult to find a lender that is willing to give you a decent interest rate. Of course, a “decent” rate depends upon how much interest you are paying now.
Even if you do find a better rate, there are some other factors to look at before making this decision.
In all likelihood, a mortgage broker may be able to find someone to take a chance and allow you to remortgage. However, there will probably be significant fees attached to the transaction. Closing costs on a remortgage can add up rather quickly and offset any savings.
If these closing costs are folded into the overall mortgage, the lower rate may actually end up costing you more money than if you were to wait a couple more years.
If you are finding it a challenge to obtain a decent mortgage rate, consider waiting for two to three years and allow some of the bad credit to fall off your report.
The payments may be higher than you want right now or the interest might be more, but if you allow your credit to come back into a good standing, you can probably remortgage and find a better rate that will actually benefit you.
Even if it means tightening the purse strings for a few more years, this is probably a better option than rushing into a new mortgage that is only slightly lower than the one you have now.
While some financial experts say the housing market is finally on the way back, there are probably at least two or three more years of favorable rates in your future.
Try to get your credit rating up before the market turns fully and you should be fine.