In times of rising interest rates and spiralling household debts, some people are left with no option other than to reorganise their finances in order to avoid bankruptcy.
One of the most popular methods of gaining relief from unmanageable debt is through Individual Voluntary Arrangements (IVAs).
The popularity of IVAs increases after long periods of low interest rates and excessive borrowing that are followed by periods of rapidly increasing interest rates. This is because the cost of the money previously borrowed will increase.
When this situation occurs, people who have over borrowed are forced to find solutions to their debt problems as they can no longer afford to keep up with their loan repayments.
An IVA is one of several ways of reorganising debts and using any surplus household funds to make repayments each month. IVAs are not an easy way out of debt and the rules are strict.
An alternative to IVAs is a debt consolidation loan. A debt consolidation loan is also called a bad credit mortgage and is secured against the borrower’s home.
A bad credit mortgage allows for individual debts to be consolidated into one loan and the amount that can be borrowed will be based on the equity value of the applicant’s home.
A bad credit mortgage can make the repayment regime of various individual debts more manageable as their will only be one monthly repayment amount to pay each month. This can help considerably with household budgeting.
When credit cards, personal loans, store cards, and other debts are consolidated into one bad credit mortgage, the loan products that originally had a shorter term will now have the same term as the bad credit mortgage. This means that although the amount of the monthly payments reduces, more money is repaid in the long term.
Neither an IVA nor a bad credit mortgage represents an easy way out of financial difficulties.
If you are facing debt problems, advice should be sought from debt counsellors and independent mortgage brokers in order to discover whether an IVA, a bad credit mortgage, or a different option altogether is the best solution to your debt problems.
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A few bad credit mortgage tips to make sure you get the best deal possible:
1. Shop Around - Don't be embarrassed by your bad credit, embrace the challenge of taking steps to improve it - and a mortgage can absolutely be one of those steps. Talk to different mortgage brokers and look online at your bad credit mortgage options.
2. Make sure your credit score is correct. Remove paid off or closed accounts - make sure you aren't a victim of identity theft or mis-reporting. It can take some time and effort to fix your credit report, but it'll be worth the work.
3. Once you have a bad credit mortgage, use it to your advantage. Making mortgage payments on time is the fastest road to improving your credit score.
You have given very nicely describe A bad credit mortgage. As per my view a bad credit mortgage permits for person debts to be combining into one loan. It can make the refund regime of various individual debts more manageable as their will only be one monthly repayment amount to pay each month.
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