Can you remortgage with bad credit?

Bad Credit Mortgages

Your financial situation may have taken a turn for the worse since you originally took out your mortgage. If you now have a bad credit score, it can make remortgaging more difficult. This is because lenders check credit ratings to see how well borrowers manage their finances. An adverse credit rating tells them that you’re struggling with this, which increases their risk.

Yet being able to remortgage may allow you to benefit from lower monthly repayments or borrow more to consolidate your debts. Either of these can help you to get your finances back in shape — so can you remortgage with bad credit?

Can you remortgage with bad credit?

The simple answer is yes, you can remortgage with an adverse credit history. Many lenders offer remortgages for borrowers with bad credit but your choice of remortgage products may be limited. Depending on the reason for your bad credit rating, you may be charged a higher interest rate and possibly higher fees by the lender. This is to cover the extra risk they’re taking on.

The reason for your bad credit

The severity of your bad credit issue can also affect which lenders will be able to help you. The more severe the issue, the fewer lenders you’ll have to choose from. Specialist lenders, however, offer more flexibility than high street lenders when it comes to bad credit remortgages. The rates offered by specialist lenders are determined on an individual basis as your situation will be different to anyone else’s.

The equity in your property

Another factor that can affect your ability to secure a bad credit remortgage is the level of equity you have in your property. The more equity you have, the better. The lower the equity, the more difficult it will be but this is when a specialist lender can help as they will assess you on a case-by-case basis.

Our mortgage brokers are well-versed in dealing with bad credit mortgages and remortgages. They will assess your situation first and then approach the most suitable lender on your behalf.

Try to improve your credit score before remortgaging

Lenders have their own criteria when it comes to checking credit scores so there’s no set score that you need to have. However, a way to increase the pool of lenders that you’ll have access to for a remortgage and, therefore, the number of remortgage products you can choose from, is to work on improving your credit score before applying. Ways to do this include:

  • Register on the electoral roll
  • Ensure that the correct address is detailed on your credit report
  • Ensure that all of your bills are paid on time
  • Stay within your credit limits, such as with your overdraft and credit cards
  • Close any accounts that you no longer use
  • Check the accuracy of your credit file and contact the credit reference agencies to make any necessary corrections
  • Remove any financial links to others with bad credit
  • Avoid applying for credit
  • Reduce your debts as much as possible
  • Refrain from getting into more debt. For example, don’t take out a new loan to try and clear some of your existing debts as this will do more harm than good to your credit score.

Considerations before remortgaging with bad credit

There are various things to think about before applying for a remortgage when you have bad credit.

A high interest rate

We’ve already mentioned that you will probably have to pay a high interest rate when remortgaging with bad credit. You need to ensure that you’re still getting a better deal than the one you have now, otherwise, it’s simply not worth it.

The costs involved

You also need to take the fees into account. These can include an arrangement fee, a valuation fee, legal costs and possibly an early repayment charge (ERC) from your current lender, for example. Our mortgage brokers can check all of the costs involved to give you an accurate comparison of your current deal with a remortgage deal. That way, you can weigh up whether remortgaging at this time is right for you or not. Just give us a call on 01322 907 000 to discuss your circumstances with one of our bad credit mortgage specialists and discover the remortgage deals that are available for you.

Don’t keep applying to lenders yourself

It’s important not to keep applying for a remortgage direct with lenders. With a bad credit application, you’re more at risk of being rejected. Each lender checks your credit history and with each rejection, your credit score is negatively affected. Our mortgage brokers work closely with lenders specialising in bad credit applications. As such, you can rely on their expertise to find the most suitable lenders for your circumstances and negotiate the best remortgage deal for you.

Your reasons for remortgaging

The reason you’re applying for a remortgage can affect the outcome. For example, if you want to borrow more for debt consolidation, the lender may cap the loan-to-value (LTV) ratio they’re prepared to offer you.

Arrange your remortgage with bad credit

Our mortgage brokers are here to help you secure the best remortgage deal possible. Give us a call on 01322 907 000 to discuss your current deal and circumstances along with your remortgaging requirements.

Whatever your reason for remortgaging, our brokers will search for the best deal to meet your needs. Your tailored application will be presented to the lender deemed most suitable for your case and your dedicated broker will oversee the entire process from start to finish. That way, you can save time and stress while being confident of a successful outcome.