If you are an existing home owner with an adverse credit history and you wish to remortgage your property, you may be required to apply for one of many problem remortgage products.

A problem remortgage product is designed for mortgage applications that are not straightforward. This is usually because of an impaired credit history that will stop the applicant from applying for a remortgage with traditional high-street lenders.

High-street lenders normally rule out applications that contain one or more instances of adverse credit due to the perceived increase in risk in lending money them.

This does not entirely rule out such applicants from the mortgage market. In fact there are dozens of lenders who will consider such cases. It does, however, usually mean that the applicant will be charged an interest rate that has been inflated by several percentage points to account for the increased risk.

As well as the increased interest rate, there are other terms and conditions that problem remortgage products have over and above standard products.

The most notable of these is the tie-in period. Problem remortgage products usually come with an early redemption penalty which can be as high as five percent of the loan balance.

The charges become payable if the mortgage is redeemed during the tie-in period, which can be up to five years.

Problem remortgage product can also have hefty application fees attached. These fees are payable upon application and are sometimes non-refundable. While they can be expensive, some lenders allow application fees on problem remortgage products to be added to the loan balance.

This means that the borrower will pay off the fee over time along with the balance of the loan. While this can eliminate the problem of paying a hefty fee upfront, it will increase the overall cost of the loan as interest will accumulate on the fee over time in the same way that it is charged on the remainder of the loan balance.