Remortgaging with bad credit

There’s a number of reasons why you might want to remortgage. Whether you want to get a better deal or take out some extra cash, remortgaging can work for lots of situations. Maybe you want to:

• Reduce your monthly mortgage payments. You can do this either by moving to a better rate with the same lender your current mortgage is with, or switching to a new lender.

• Release cash from your home by borrowing more money from a lender. This would be transferred to you as a lump sum payment. How much this amount will be will depend on the equity you’ve got in your home. 

• Take advantage of competitive interest rates. Interest rates fluctuate all the time, but when they’re particularly low, you might want to save money by remortgaging so you can switch to a better interest rate.

Read more in our Complete Guide to Remortgaging.

Typically, remortgaging is a quicker process than when you did it for the first time. It depends on your individual circumstances, but the process generally takes around four to six weeks if you don’t have any major delays with your application or solicitors.

A good way to speed up the process is to get all your paperwork ready ahead of time. Our Mortgage Experts can help you do this. They'll be able to recommend the lenders most likely to accept you. If you have bad credit history or a complex income then it’s especially important to get help from an advisor. Make an enquiry to find out your bad credit remortgage options.

You can remortgage if you're on a fixed-rate mortgage deal, but it usually comes with a penalty fee for exiting early. You'll normally have to pay between 2% and 5% of the amount of your mortgage. 

For this reason, it's usually better to wait until your fixed rate deal’s ended before getting another mortgage. But if you find yourself needing to change while still in your current deal then it's worth talking to a specialist mortgage broker. Our Mortgage Experts can let you know your bad credit remortgage options and help you weigh them up.

If your financial situation has changed since you first got your mortgage, it’s possible your current lender might refuse to offer you a remortgage. Unfortunately, being accepted once doesn’t mean you’ll get accepted again. 

Most mortgage lenders and banks will look at your remortgage application in the same way they would if you were applying for the first time. Many high street lenders will look at a bad credit score as an indicator that you’re not great with credit and might decide they don’t want to take the risk. But it’s a big misconception that if you try to remortgage with bad credit then it’s an automatic ‘no’ from all lenders. This isn’t the case.

There are plenty of specialist lenders who’ll look at your mortgage application in detail, rather than automatically reject you based on your credit score. The specialist mortgage market isn’t well known because often specialist lenders aren’t available directly to borrowers. They don’t advertise because they’re only available through specialist mortgage brokers (like us!) who can help people that have a complex situation. Our Mortgage Experts can really help your chances of being accepted, as they know all the specialist lenders that offer remortgages for bad credit applicants.

Yes, you can remortgage to pay off your debts. Debt consolidation is actually a common reason why people decide to remortgage 

When you’re remortgaging to consolidate debts, finding the right mortgage is absolutely essential. It’s a chance to move onto something more affordable and lower-interest, which can make your monthly payments easier to manage. 

You might end up paying more over time when remortgaging to consolidate your debts, but for many people, reducing their monthly repayments and outgoings can help you get into a better, more stable financial position.

If you’re thinking about using a mortgage to pay off your debs, there’s two main ways that remortgaging could help:

• Take a lump of cash out of your home (known as releasing equity) and use this to pay off your debts

• Get a better deal on your mortgage to reduce your monthly repayments, meaning you’ll have more money available to repay your other debts

If you decide to take out a cash lump sum when you remortgage, you’ll basically be taking out a bigger mortgage. This means that your monthly payments will go up. It’s important to make sure you’re fully informed of the impact that remortgaging will have so you’re still able to keep up with your monthly payments.

You should speak to a mortgage broker when you want to consolidate debts by remortgaging. Our Mortgage Experts can will look at your options and find a solution.

In many cases, remortgaging can be a way to stabilise your finances and pay off some existing debts. Consolidating your debts into one monthly payment can be a lot more manageable and easier to keep on top of and can also make them more affordable overall.

Remortgaging may also make your monthly mortgage payments smaller if you already own a large portion of the house, as you may be able to negotiate reduced payment terms, or switch lenders to get a better deal.

The main benefit of remortgaging is that you’ll receive a large lump sum, which is useful to have if you’ve got other debts stacking up.

Read more in our Guide: Debt Consolidation Options for Homeowners

Think carefully before securing any other debts against your home. It could be repossessed if you don't keep up your repayments.

It all depends on your situation and circumstances, but you should have some options when it comes to remortgaging with bad credit. It's likely you'll need a bad credit mortgage broker to find you a specialist lender. Lenders assess how ‘high risk’ you are, and make a decision about whether to lend to you based on that. For example, if you have a bad credit score because of a few missed payments on your phone contract, that’s quite a ‘low risk’ situation. But if you’ve been made bankrupt in the last few years, lenders will see that as ‘higher risk’. 

Many mainstream lenders are reluctant to offer someone with bad credit a mortgage. That's because they’re not set up to deal with those kinds of cases. But there’s plenty of specialist lenders who’ll consider your case. These specialist lenders aren’t usually directly available to you as a borrower - they won’t come up in your online searches and your bank won’t tell you about them. They’re mostly only accessible through working with a mortgage broker. That’s where we come in! The tricky stuff is all we do. Make an enquiry to speak to one of our Mortgage Experts.

It’s always a good idea to keep your credit score as healthy as possible. Your credit report is one of the main things that lenders will look at when determining whether to accept your remortgage application, so it’s definitely a good idea to check your credit score and see what you could do to improve it.

You can do this for free with a trial of checkmyfile* (usually £14.99 a month). It’s the UK's most detailed and trusted credit report. They’re the UK’s top ranked credit report service on Trustpilot for outstanding service, and have been around for over 20 years helping people understand the credit history system. Get your report.

*Heads up, when you click through to our affiliate links, we may earn a small commission at no extra cost to you. We only recommend sites we truly trust and believe in.

Here are some top tips for improving your credit score with a history of payday loans:

• Pay off any outstanding debt in full (including credit cards, loans, and similar). If that’s not possible, just pay as much as you can.

• Make sure you’re listed on the electoral roll. 

• Consider reviewing the number of credit cards and accounts you’ve got open. Even if they don’t have outstanding balances. 

• Another option is to wait until more severe credit issues have dropped off your file, such as CCJs or IVAs. 

Read more tips on boosting your credit rating before applying for a mortgage.

The interest rate you’ll end up paying all depends on your situation and circumstances of your bad credit history. You might have to pay a higher interest rate, but it’ll depend on how bad your score is, how it happened and how long ago it was.

Read more in our Guide: Mortgage Types and Rates for Bad Credit.

Remortgaging can help reduce your monthly outgoings if you find a more competitive mortgage deal than the one you’re currently on. 

The remortgaging process works pretty much the same as the first time round. A new lender will weigh up factors such as your credit score and how much is left to pay on your current mortgage, and the value of your property to come up with a new package for you. But it might not always be the best option.

A new mortgage might be more restrictive than the one you’re currently on and you may also have to pay an early repayment charge on your existing mortgage, which can be as much as 5% of the outstanding value of your mortgage. There could also be legal and survey fees which could outweigh your potential savings.

If you want to weigh up your options, speak to a specialist mortgage broker who’ll know what options are open to you. You can also read more in our Complete Remortgaging Guide.

You should still be able to remortgage with adverse credit issues but different issues will affect your application in different ways. For example, some credit issues are considered more serious than others and may make lenders more reluctant to lend you money. A missed phone payment will be looked on more favourably than a bankruptcy or IVA on a mortgage application.

They’ll consider things like when the issues took place and how much equity you have in your property to weigh up what they consider the ‘risk’ of lending to you.

Read more in our Guide: How to Remortgage With Bad Credit.

Yes, you can absolutely remortgage with credit card debt. Life is unpredictable, and sometimes you need to use your credit card to pay for certain things.

Having loans or credit cards won’t stop your remortgage application in its tracks. However, the size of your outstanding balances could affect how much you can borrow.

Mortgage lenders look at a number of different factors when assessing your remortgage application. Things such as your income, the size of your deposit, and your credit rating will all influence whether or not you’re approved. Lenders will also check how good you’ve been with making your credit repayments.

Read more in our Guide: Getting a Mortgage With Credit Card Debt.