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Can I Refinance with a Default or Judgement? Understanding Your Options

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For many homeowners, refinancing can offer a path to better interest rates, lower monthly payments, or a shorter loan term. However, if you have a default or judgement on your credit report, you might be wondering if refinancing is even a possibility. The good news is that while challenges exist, there are steps you can take to improve your chances of refinancing successfully.

The Impact of Defaults and Judgements

Defaults and judgements are significant negative marks on a credit report and can stem from a variety of situations, such as unpaid loans or court judgements. These marks signal to lenders that there has been a serious lapse in financial responsibility, making them hesitant to offer new credit or refinancing options.

Serious Credit Infringements Explained

A serious credit infringement is a step beyond a default and indicates that the creditor believes the debt will not be paid. This could be due to a debtor leaving their last known address without paying the debt or not responding to the creditor’s attempts to contact them. These infringements can remain on your credit report for seven years and can significantly impact your ability to borrow.

Assessing Your Situation

The first step is to get a clear picture of your credit report. This will help you understand the details of your defaults or judgements and the impact they have on your refinancing options. It’s crucial to ensure that all information on your report is accurate and up to date.

Taking Action to Mitigate the Impact

Seek Professional Help:

Seek the expertise of credit repair law firms or advocates who can assist in negotiating with creditors to potentially have the default marked as paid or settled, which is viewed more favourably by lenders.

Understand the Timeline:

Defaults and serious credit infringements can remain on your credit report for up to seven years. If your default is approaching this period, it might be worth waiting for it to age off your report before refinancing.

Consider Specialist Lenders:

Some lenders specialise in loans to people with adverse credit histories. Find one that may consider your refinancing application despite a default or judgement.

Strengthen Other Aspects of Your Application:

You can make your application more attractive by demonstrating strong income, stable employment, and a good amount of equity in your property.

Understanding the Costs

Refinancing with a default or judgement on your credit report may come with additional costs. Lenders who are willing to take on higher-risk applications often compensate for this risk with higher interest rates or fees. It’s important to consider these potential costs when deciding to refinance.

While the rates may be higher than standard loans, refinancing can still be a financially sound move if it aligns with your long-term goals and current financial situation.

Personalised Support

We understand that everyone’s financial journey is unique. Our Home Loan Experts provide tailored advice and support, ensuring that the refinancing solutions we offer are customised to your individual circumstances. Our team will work with you to assess your situation, explore your options, and develop a plan to get you in achieving your home goals.

Contact us to discuss how we can support your refinancing goals today.

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