Can I remortgage with a bad credit rating?

By Joanne PriorCeMap

Last Reviewed: 10th February 2020

This is a question we’re asked over and over again. How can you remortgage your home if you have a poor credit score?

We won’t beat around the bush. Yes, remortgaging remortgaging with a bad credit history can be difficult but don’t worry. It isn’t impossible to get a mortgage with a bad credit rating.

There are lenders out there who will consider you for a remortgage application, even if your credit history is less clean and more colourful.

In what circumstances should I remortgage if I have bad credit?

There are plenty of reasons you might want to remortgage, even if you do have bad credit. These could include:

  • Debt consolidation. This is when you want to add your existing debts to your monthly mortgage payment. This can often result in a lower interest rate on your other debts, enabling you to pay them off quicker.
  • Home renovations. If your home is in need of some serious TLC, remortgaging can be a great way to raise the funds for an extension, essential repairs or even that much-needed new kitchen.
  • A considerable purchase. Maybe you’re in desperate need for a new car? If you need money for a large purchase, remortgaging can be a good option.

Why do I have a bad credit score, and how will it affect my remortgage application?

Your bad credit rating could be the result of a number of things. Perhaps you’ve previously missed bill payments, or had mortgage arrears. You might even be using a debt management plan to repay what you owe.

Each adverse event on your credit record will have a different effect on your credit report. The more blotches you have on your record, the more reluctant banks may be to lend to you.

Our advisors have arranged remortgages for people with poor credit in the following circumstances

  • Remortgage with no credit history – With no credit history, this means that you essentially have nothing on your credit report, as you have borrowed no money in the last 7 years. No credit history can read the same way as poor credit when it comes to remortgaging.
  • Remortgage with a low credit score – All lenders will take a look at your credit history before making a decision on your eligibility for a remortgage. A low credit score or poor credit history will certainly affect your chances of securing a loan with most lenders. This doesn’t mean that you won’t be able to remortgage with a low credit score, it just means that you will need to go through a specialist lender. There a number of lenders out there that will specialise in poor credit remortgages, so speak to a whole market mortgage advisor, instead of putting applications in with numerous banks which may further adversely affect your credit rating.
  • Remortgage with late mortgage payments or missed mortgage payments – Mortgage arrears can be a serious issue if you are hoping to remortgage, especially if there are other poor credit issues to consider. This is because late or missed mortgage payments are deemed as the most severe kind of default, indicating a real risk in the ability of a lender to make their repayments. Your eligibility for remortgage with arrears will depend on how historical they are and the size of deposit you have. There are poor credit mortgage lenders out there that can help you remortgage even if you have recent arrears on file.
  • Remortgage with CCJ’s – There is an increasing number of lenders that will consider those with County Court Judgements (CCJs). Having a CCJ doesn’t prevent you from remortgaging, with the key factor being the date of the CCJ. The longer ago the CCJ was issued the better your chance of being accepted for a remortgage. The number of CCJs and whether they were satisfied or unsatisfied will also be taking into consideration for a poor credit remortgage.
  • IVAs – The eligibility criteria for a remortgage with an Individual Voluntary Arrangement (IVA) will differ depending on whether you have a current IVA or a historical one. Being in a current IVA can put a limit to your remortgaging options, but lenders can be more flexible as you are not applying for new credit. It is certainly possible to remortgage whilst in an IVA or to even pay off and IVA. However, if you are hoping for an IVA remortgage, you will need to show a lender that you have been making mortgage payments throughout the IVA for the previous 12-24 months. Speak to a lender or advisor who has expertise in bad credit mortgages to better determine your own eligibility.
  • Debt management schemes – If you are thinking about remortgaging to help pay off your debt management plan, you will have to consider whether you meet the right criteria before proceeding. When remortgaging the LTV (Loan-To-Value) is at around 80% in most cases, so if you do not meet this requirement, you will be unlikely to be able to release any equity via a remortgage. Even if you own a larger portion of your home, say 50%, you will still need to show a lender that you can afford the repayments during the debt management scheme. If you have completed a debt management plan, you will probably find it easier to remortgage, but you still may have to go through a specialist poor credit lender.
  • Repossessions – If you have had a home repossessed in the past that doesn’t mean you cannot remortgage in the future. You simply need to look specialist bad credit mortgage lenders and show that you can meet the criteria in terms of deposit and affordability.
  • Bankruptcy – When it comes to bad credit issues, bankruptcy is one of the most serious ones for lenders. Luckily, there are a number of mainstream and specialist lenders that will consider remortgages for those that have been declared bankrupt in the past. For more information on bankruptcy remortgages, get in touch with us today and discuss your options.
  • Payday Loans – These high-interest loans are never a smart way to build up your credit rating and you should know that mortgage lenders do not look upon then favourably at all. Payday loans are differentiated from other forms of credit on your credit report, so lenders will know how often you have used these loans in the past. Often, lenders will see using payday loans as a sign you can’t manage your money, so will have a significant impact on your credit worthiness, meaning you’ll have to look at poor credit lenders.

Is there still a chance that I could remortgage with a poor credit rating?

Absolutely. It is important to remember that some “blotches” on your credit report carry more weight than others. Lenders are more likely to be lenient if you missed a bill payment a couple of years ago, with a good explanation. On the other hand, if you’ve recently missed more than one mortgage payment in a row, lenders may be less likely to believe that you’re able to keep to your repayment schedule.

Luckily, each lender has different criteria for assessing your credit score. In fact, you might be pleased to know that some lenders don’t actually credit score at all.

This means that even if your current mortgage provider may not offer you a new rate, another lender out there might. It’s all about finding the right lender for you.

What should I do if I want to remortgage with bad credit?

If you’re looking to remortgage but have a bad credit rating, it’s always a good idea to talk to an expert. Our brokers will be able to assess your situation before finding a lender to suit your circumstances. Not only does this help to protect your credit rating, it also saves you a lot of time.

If you’d like to talk to someone about remortgaging with bad credit, we can advise you. We’ll search over 90 lenders to find the best remortgage deals for people with bad credit.

To talk to us and begin your remortgage application, get in touch.

Jo is in charge of our remortgage team. Jo knows how to find the best deal, even if it’s with your existing lender, she’ll let you know.

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