The mortgage lending market in UK has become extremely competitive. Mortgage lenders are vying with each other in offering lower rates to new buyers and to those who already have an outstanding mortgage. Borrowers are cashing in on the opportunity by getting their house re-mortgaged from a new lender. This helps them save a lot on interest rates.

There is so much of competition among the lenders that they are willing to grant mortgage to people with bad credit record also. A bad credit second mortgage loan is usually availed by people who have missed payments, arrears, defaults, county court judgements and bankruptcy against their name. Since there is collateral in the case of re-mortgage loans, lenders don’t hesitate much before sanctioning bad credit mortgage refinance UK. The reasons for switching the lender are:

1. Lower interest rate: This is chief reason why people switch their mortgage lender. As the competition increases, more and more lenders enter in the loan market and offer lower interest rates than their nearest competitors. While switching the lender however one has to be careful about the redemption penalty imposed by the previous lender. If you are not going to profit from the change as a result of high redemption penalty there is no point going for bad credit mortgage refinance UK.

2. Increasing or decreasing the term: Switching lenders is also the favourite method with people who are dissatisfied with the repayment term of their mortgage. Some of the borrowers are able to pay more than they are actually paying, while some are not in a position to pay their current monthly instalments. Both the type of people can switch lenders to increase or decrease their repayment term.

3. Encash the equity: Equity is basically the difference between the current property value of your house and the outstanding loan on it. If the current property value of your house has increased, you can borrow a second mortgage loan which can be up to 90 percent of the current property value of your house. The re-mortgage amount can be used by you for several other purposes.

4. Debt consolidation: Since mortgage interest rates are lower than those on other loans, a re-mortgage is the best option for those who want to consolidate all their debts into one.

Before availing the bad credit second mortgage loan, please check whether switching lender would be beneficial for you. Some predatory lenders charge high early redemption fees if you switch to a different lender. Changing such lenders can actually land you in trouble.