How To Remortgage With Bad Credit

Remortgaging can be a great way to raise money for home renovations or pay off debts by taking equity out of your property. It's also a good opportunity to get a better deal on your current mortgage rate. But if you have bad credit when the time comes to remortgage, you might be worried about your options or whether you’ll be accepted.

In this guide, you'll find everything you need to know about how to remortgage with bad credit and why Haysto could help when others can’t. 

Can you remortgage with bad credit?

Yes, plenty of lenders can help you remortgage even if you have bad credit. Your choices may be more limited, and the interest rates might be higher than for someone with a perfect credit score, but it’s possible to find a suitable remortgage deal to suit your circumstances. 

Most mortgage lenders and banks will look at your remortgage application as if you were applying for the first time. Many high-street lenders will see a bad credit score as a red flag and 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’. 

Specialist mortgage lenders will look at your application more thoroughly rather than automatically reject you based on your credit score. The specialist mortgage market isn’t well known because these lenders aren’t available directly to borrowers. They don’t advertise and are usually only available through experienced mortgage brokers (like us!) who can help people with more complex issues, such as bad credit. 

If you have a bad credit history, this can make things more complicated, but not impossible. That’s why it’s much wiser to first speak with a mortgage broker who has experience helping people remortgage with bad credit and will know where to look and exactly which lenders to approach. 

If you get in touch, one of our Mortgage Experts will contact you straight away to look at your situation and discuss the options available. 

What types of bad credit can affect a remortgage?

If you've ever been turned down for a remortgage because of bad credit, you'll want to know what's caused it. There are a few different types of credit issues that can harm your Credit Report and make you seem ‘riskier’ to lenders, such as:

Missed or late payments

Your credit history gets updated whenever you make a late payment, miss a payment altogether, or pay less than the minimum on your credit agreement. The more this happens, the worse your credit score will get over time. It suggests to lenders that you're not reliable when it comes to paying back what you owe.  

Getting a CCJ

A County Court Judgment (CCJ) occurs if you fail to pay someone money you owe. If you don't deal with a CCJ quickly, it can stay on your credit history for six years and affect your ability to get good rates on loans, credit cards, and remortgages. If you're issued a CCJ, you should try to pay the entire amount within a month. If you do this, the CCJ will not be registered on your credit record. 

Being declared bankrupt

Unsurprisingly, mortgage lenders view bankruptcy as one of the most severe forms of bad credit, and it can have quite an impact on your credit rating. If you've been declared bankrupt since you first took out your mortgage, remortgaging can be much more difficult. The same goes for an IVA (Individual Voluntary Arrangement).

Having no credit history

Never applying for credit might seem like a good way to get the perfect score, but in reality, the opposite is true. If you've never taken out any type of loan or credit card, then Credit Reference Agencies (CRAs), who gather information on your financial record, can’t give you a credit score, leaving you with no credit history at all. This means mortgage lenders have no evidence to decide whether you’re an able applicant to lend money to or not.  

If your remortgage application has been affected by any of these issues (or others), it’s important to remember that a bad credit record isn’t permanent. It also doesn’t mean you must wait until your record is clean before applying for further credit. 

If you're looking to remortgage and have bad credit, our Mortgage Experts can help you find the right mortgage lenders who specialise in these situations - right now! Just make an enquiry to get started. 

What credit score do you need for a remortgage?

There isn’t one universal credit score needed to get approved for a remortgage. A lower credit score can impact how many mortgage lenders will accept your application. But, it’s still possible to remortgage with a ‘poor’ or ‘fair’ credit rating. 

The three main Credit Reference Agencies (CRAs) - Equifax, Experian and TransUnion - each use a different scoring system to determine your credit score. A poor credit score with Equifax is below 379, and a fair score is between 380 and 419. For Experian, a score below 720 is poor and between 721 and 880 is fair. A poor credit score with TransUnion is below 565, and fair is between 566 and 603. 

Most specialist mortgage lenders will look at each application for a remortgage on a case-by-case basis. This means they’ll also consider other factors, such as your disposable income, employment record, and the amount of equity you have in your property, as well as your credit score. 

It’s possible to have bad credit but be a strong applicant in other areas and, therefore, get approved for your remortgage, depending on which lender you’ve applied with. 

If you have a ‘poor’ credit score, it’s a good idea to take some time rebuilding your credit record before remortgaging. A higher score will give you a better chance of securing the best deals. 

Can you remortgage without a credit check?

If you remortgage with your current lender, they may not need to check your credit history. However, if you want to take money out of the property, change the repayment term, or amend your mortgage type, the lender will need to look at your Credit Report. 

Can you remortgage with a County Court Judgment (CCJ)?

Yes, it’s possible, although each lender's criteria is slightly different. Even if your CCJ has been settled, there are a few factors a mortgage lender will want to look at more closely. These include:

• How recently the CCJ was registered. This will be one of the most important factors for lenders when it comes to reviewing your application. The older your CCJ, the easier it will be to remortgage. 

• The amount involved. Some mortgage lenders will have an upper limit for the amount the CCJ debt was for, and some won’t. If it’s a large amount (typically from £1,000-£2,500 but this might vary from lender to lender), it could result in a lower loan-to-value being offered. 

• How many CCJs you've had. If your CCJ has been a one-off, you’ll seem less risky than if you have a pattern of them on your credit history. Most high-street lenders will have an upper limit on the number of CCJs they’ll accept, but some specialist lenders have no limit.  

• If your CCJ has been satisfied.  A satisfied CCJ - one that you've paid off - will be viewed more favourably than one that remains unpaid. However, a few specialist lenders will still consider you for a remortgage with an unsatisfied CCJ, depending on when it happened and how much it was for.  

How the above factors will affect your chances of remortgaging will vary from lender to lender. That’s why it’s always a good idea to speak with a mortgage broker first who can assess your specific case before you apply. 

Can you remortgage with defaults?

Yes, it's still possible to remortgage with missed payments or even a default on your credit record. You’ll stand a much better chance with a specialist lender, as they’ll be more likely to look at your remortgage application as a whole and not just focus solely on your credit history. 

For defaults, a specialist mortgage lender will look in more detail at the following factors before making their decision:

• When the default was first registered

• Whether the default is satisfied or unsatisfied

• How much the default debt was for

• The type of default

• How many defaults you have on your credit record

• Why the default occurred

Defaults stay on your credit record for six years, but you don’t have to wait that long before getting a remortgage. If you have a default, it’s wise to speak with a mortgage broker who can help you find the right lenders for this type of credit issue.  

Can you remortgage with an Individual Voluntary Arrangement (IVA)?

Yes, it’s possible. An IVA is considered a severe form of bad credit that remains on your credit file for six years. But there are plenty of specialist lenders who will consider applicants for a remortgage with this type of credit issue on their record. 

For IVAs, this means looking more closely at:

• When the IVA was first registered

• How long it's been since the IVA was fully repaid and discharged

• What the circumstances were surrounding the IVA initially

If you’re still paying your IVA, it’s unlikely you’ll be able to remortgage, as this would need the approval of your Insolvency Practitioner. Once it’s settled, you can start to apply for further credit, including a remortgage, even if it’s still showing on your Credit Report. 

Can you remortgage after a bankruptcy?

Once you’ve been discharged from bankruptcy, it is possible to remortgage. Your chances of success will really depend on how long it’s been since you were discharged. The longer it’s been, the more mortgage lenders will be available to consider your remortgage application. 

Most, if not all, mainstream mortgage lenders won’t consider you for a remortgage while the bankruptcy remains on your credit record, which is six years after you’ve been discharged. However, some specialist mortgage lenders will consider you for a remortgage within this timeframe.

Before you apply, it’s important that you do all you can to rebuild your credit record and pay down your existing mortgage so there will be plenty of equity in your property before remortgaging. This will reduce the perceived risk for a lender when they look at your application. 

Can you get a joint remortgage with bad credit?

Yes, you could. Mortgage lenders will follow the same approach for joint remortgages as they do for sole applicants. Your chances of getting the remortgage you need will largely depend on the type of credit issue that’s caused your low credit score, when it happened, and the amounts involved. 

For joint remortgages where just one applicant has bad credit, the lender will focus on their credit record and how much of an impact that has on the application overall. If the other applicant has a perfect credit score, this will certainly help your case, but some lenders may be more concerned about the lower of the two credit scores and the circumstances that caused it.  

How to improve your chances of getting a remortgage with bad credit

If you’re looking to remortgage, it’s understandable to be concerned you might not get accepted if you have bad credit. But finding out where you stand and taking the following steps is the right place to start. 

• Check your Credit Report. By downloading your Credit Report**, you can see exactly what credit issues are impacting your credit score and when they were registered. So, there’ll be no surprises when a lender views the same information. You can also check for any errors or inaccuracies and have them removed before you submit your mortgage application. 

• Rebuild your credit score. Once you’ve seen your Credit Report and know the extent of the issue, it’s important to do all you can to improve your credit score. Check that you’re registered on the electoral roll* and ensure all other financial commitments are paid on time. Keep checking your credit record to see if your score is improving. You should also avoid applying for any other forms of credit unless necessary.

• Speak to a mortgage broker. An experienced broker can help you prepare your application and will know which lenders are best placed to accept you for a remortgage, saving you a lot of time and unnecessary hassle.  

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