Consider a refinance with a poor credit score


Poor Credit Home Loan Refinance, while more challenging than with good credit, can still offer several benefits for homeowners who are struggling financially or looking to improve their financial situation. Here are some potential benefits of refinancing with poor credit: 

  • Lower Monthly Payments: If you can secure a new loan with a lower interest rate, even with poor credit, you may be able to reduce your monthly mortgage payments. Lower payments can help make your housing costs more manageable and free up funds for other financial needs. 
  • Debt Consolidation: Refinancing can be a way to consolidate high-interest debts, such as credit card debt or personal loans, into your mortgage. By rolling these debts into a new mortgage, you may be able to secure a lower overall interest rate, potentially reducing your overall debt payments. 
  • Improving Credit Over Time: Making on-time mortgage payments on your refinanced loan can help improve your credit score over time. As your credit score gradually increases, you may become eligible for better loan terms in the future, allowing you to refinance again for even greater benefits.  Small things like pay day loans, lots of enquiries and missed payments really damages someone’s credit score. Avoid Payday loans and lots of enquiries. 
  • Avoiding Mortgage Defaults, Loan Arrears or Foreclosure: If you are financially struggling the most important debt to pay is the mortgage.  If you miss payments on smaller unsecured loans or debts this is not seen as bad as missed home loan repayments. Refinancing can help you avoid defaulting on your current mortgage, falling into arrears on the mortgage or other debts or worse, facing foreclosure. So rule number one – try to always make mortgage repayments even if you are paying less than the minimum, make sure you show effort to pay. 
  • Access to Home Equity: If you have built up equity in your home, you may be able to access some of that equity through a cash-out refinance, even with poor credit. This can provide much-needed funds for home improvements, debt consolidation, or other financial goals. 

Poor credit home loan refinance can offer benefits. However, it’s essential to be aware of the potential challenges and drawbacks. You may encounter higher interest rates and less favourable loan terms compared to borrowers with good credit. Additionally, there may be limited options available to you.  However it is recommended to use the services of a Mortgage Broker especially one who has experience in reviewing the overall situation and one who has great success with poor Credit Customers.  

Remember that refinancing is not always a guaranteed solution, and it may not be available to everyone, depending on your credit score, income, equity and other factors.   

Acting early and exploring your options before you fall into arrears is generally a wise approach to managing your finances.  Plan Ahead and chat with a WhiteStar Broker early.  Our team often seek exceptions – some poor credit situations do not lead you to a poor credit home loan. 

Plan Ahead and chat with a WhiteStar Broker early.  Contact us today.