Remortgage with bad credit

Remortgage with bad credit

Remortgaging can be a challenging task if you have bad credit. Most lenders require applicants to have good credit when switching mortgages, making it difficult for those with bad credit to qualify. Lenders thoroughly assess mortgage eligibility, and having bad credit adds complexity to the application process.

However, there is some good news. If you are approved for a new mortgage despite your bad credit, you may have the opportunity to switch to a better interest rate. This can positively impact your finances by reducing your monthly payments and improving your credit file.

When you already have an existing mortgage, lenders can evaluate whether you have been consistently repaying it on time. This can have a positive effect on your remortgage application. On the other hand, late payments on your mortgage can make remortgaging more challenging. Nevertheless, there are lenders who may still allow you to remortgage, even if you have serious credit problems.

If you decide to proceed with a remortgage, our advisors can assist you with the application process when you are ready.

Key Points:

1. Can I remortgage with bad credit?

Yes, it is possible to remortgage with bad credit, even if your credit issues are severe. However, it is important to note that finding a lender willing to provide a remortgage in these circumstances may not be easy. Additionally, you may be charged higher interest rates compared to those with good credit.

2. Will the equity in my home improve my chances?

Having equity in your home can enhance your borrowing power, but it ultimately depends on the lender you choose. Some lenders may decline your application regardless of the amount of equity you have. Conversely, if you have accumulated debt, remortgaging to release equity can help you pay off some of your debt and potentially improve your credit score.

3. Will the reasons for remortgaging make a difference?

Yes, the reasons behind your decision to remortgage can influence the approval process. Different types of remortgages offer various benefits based on the chosen deal. Some common reasons for remortgaging include improving your current mortgage rate, consolidating debt, raising capital for purchases or expenses, releasing equity for investment or home improvements, buying out an ex-partner in a relationship breakdown, or pursuing a let-to-buy option. Our experts can provide assistance regardless of the reason for your remortgage, even if you have bad credit.

4. Which credit issues have the most effect on a remortgage?

Adverse credit history can impact your remortgage application differently based on the severity of the credit issues. Severe credit problems will have a more significant effect compared to minor credit issues. Adverse credit can include 
  • Late payments,
  • Defaults,
  • County Court Judgements (CCJs), 
  • Individual Voluntary Arrangements (IVAs), 
  • Debt management plans,
  • Bankruptcy, and repossession. 
Each situation is unique, and lenders consider multiple factors when assessing your credit file.

5. Which other factors do mortgage lenders assess?

A good credit score alone does not guarantee mortgage approval. Mortgage lenders consider additional factors such as loan-to-value (LTV) ratio, affordability, the dates of your credit issues, and the overall health of your finances. A lower LTV typically unlocks better rates and deals. Lenders evaluate your income, expenses, and spending habits to assess affordability. Credit issues that occurred over six years ago usually have less impact. Lastly, demonstrating improved financial stability since your credit issues can increase your chances of obtaining a remortgage.

6. Can I remortgage my house with a low credit score?

Remortgaging with a low credit score can be easier for some applicants and more difficult for others. Your credit score may be low due to credit problems or limited credit history. However, you can

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