With interest rates constantly rising after many years of cheap borrowing, a growing number of home owners with variable rate mortgages are finding themselves unable to keep up with the monthly repayments on their mortgage.



In many cases this leads the home owner to fall into arrears with their mortgage, a situation that can eventually lead to repossession.





The repossession rate has been rising rapidly of late and shows no sign of slowing down as interest rates continue to rise. Home owners who fall victim to repossession may feel like they have no option other than surrendering their home to their lenders, however, they may be able to salvage the situation with an adverse credit remortgage.



An adverse credit remortgage is a remortgage product that is designed to help people in financial distress. Borrowers who apply for an adverse credit remortgage can use the funds to pay off their existing mortgage as well as any mortgage arrears they have accumulated.



Additionally, if the borrower has enough equity in their home, they may be able to pay off other debts such as credit cards and personal loans with the funds that are released by the adverse credit remortgage.



The key factor in using an adverse credit remortgage to clean up a home owners personal financial situation is having some equity in their home that can be released as cash. If this can be accomplished, the home owner will not only be able to pay off their existing mortgage, they can also clear up outstanding mortgage and loan payments and possibly the balance of other debts such as store cards and credit cards.



The immediate effect of the borrower taking out the adverse credit remortgage is that they may be able to stop the repossession process and therefore remain in their home. This is obviously a good outcome for the home owner, especially if they have a family.



Over the long term, the borrower may be able to use the adverse credit remortgage product to clean up their credit file. If they keep up with the repayments on the adverse credit remortgage, which may be their only debt after clearing other debts, their credit score may repair over time.



After a few years of uninterrupted repayments, the borrower may be able to apply for a standard remortgage product. This may be a desirable option because adverse credit remortgage products generally have higher interest rates than standard products. If the borrower can switch to a standard mortgage product in the future, they may reduce the amount of interest they pay each month and therefore save money.