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Tips for Remortgaging with a Bad Credit Score

Remortgaging can be a great way to consolidate debts and reduce monthly payments. This guide looks at qualifying for a remortgage with bad credit and the potential solutions available.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2024-06-14
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Tips for Remortgaging with a Bad Credit Score

Remortgaging is a great way to raise capital, perhaps consolidate debts, and achieve a better interest rate and lower your monthly expenses.

However, many homeowners find themselves being turned down for a remortgage based on their credit score - making it a Catch-22 situation!

In this article, the mortgage brokers team explains how to get a remortgage with bad credit and what a lender will look for in your application.

If you'd like tailored help finding a mortgage from an independent bad credit specialist, contact Revolution on 0330 304 3040 or email us at [email protected].

Can I Remortgage With Bad Credit History?

It is always possible - but the right lender and mortgage product will depend very much on what sort of bad credit issues you have and when they occurred. There are two primary options if you’re unsure how to get a remortgage with bad credit:

  • Remortgaging your current deal with an additional value to pay off your debts.
  • Taking out a second charge mortgage designed for bad credit applicants.

While many high street banks will automatically reject any bad credit applicant, thousands of niche providers take a more flexible approach to mortgage lending.

You can remortgage with bad credit whether you own the property outright (called an unencumbered mortgage) or whether you have a mortgage and want to replace it with a larger or more competitive deal.

Can I remortgage with bad credit history for any reason? You might remortgage to:

  • Raise capital to consolidate your debts.
  • Invest in a rental property.
  • Release equity to pay for renovations, a car or a family event.

The key is always to ensure you apply to a lender who can consider your remortgage application within their lending criteria.

Your first port of call is to check out your credit reports and ensure you're 100% clear on what issues show, so you can provide context or information to reduce the perceived lender's risk.

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Most lenders will let you borrow 4.5 times your annual salary so, as long as you have a standard 10% deposit, you should be able to borrow this much.

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Can I Remortgage With Bad Credit History of Any Kind?

Adverse credit is a broad term that refers to multiple different scenarios, including:

  • A low credit score.
  • Late payments or mortgage arrears on your file.
  • Having defaults or CCJs registered against you.
  • Being in a Debt Management Plan or IVA.
  • Repossessions or bankruptcy, at the more severe end of the scale.

Now, how to get a remortgage with bad credit will depend on which of those bad credit circumstances you've experienced.

Bad credit lenders will tend to assess each remortgage application on a case-by-case basis. They look at when the situation occurred, why it happened, what sort of money was involved, and if you've since made good on your debts – meaning the answer to how to get a remortgage with bad credit is down to your personal circumstances.

However, things get trickier the further down the list you get.

Can I remortgage with bad credit history if I am currently in an IVA? If this applies, or you have experienced a property repossession in the last 18 months you will undoubtedly require tailored support from a specialist broker to find their required borrowing.

Other considerations include:

  • The deposit you have available - with the higher, the better.
  • Your loan to income ratio, which shows how much you want to borrow against how much you earn. Most lenders will lend 3.5 to four times your annual earnings.

Can I Remortgage With Bad Credit History and a Low Credit Score?

Possibly - although the right resolution in terms of how to get a remortgage with bad credit depends on why you have a low credit score.

If you already have a mortgage, it's unlikely that you have never used credit borrowing, and therefore haven't ever built up a credit history. If you are younger, this could be the cause - in which case, the lender will need to assess affordability to be confident you can afford the remortgage payments.

Can I remortgage with bad credit history that is very poor ? In that case, you will need to apply to a remortgage provider who is less interested in credit scores as they are in demonstrating your ability to keep up with the mortgage costs.

How Can I Remortgage With Bad Credit History of Mortgage Arrears?

Again, maybe - but lenders will need to know what other credit issues you may have. Missing mortgage payments and falling into arrears is a red flag that you won't make your repayments on time, so you will almost certainly need an independent broker to negotiate terms on your behalf.

If the arrears were several years ago, you're more likely to be approved for a remortgage if you can explain what happened.

How to get a remortgage with bad credit may also depend on your deposit (or equity) available. You will usually need at least a 15% to 25% deposit for a remortgage after arrears.

Can I remortgage with bad credit history if I have a higher deposit? In a remortgage scenario, that would be the equity remaining in the property to leverage as security. A larger deposit means the lender's risk drops a little further, and you'll instantly improve the offered interest rates.

Can I Remortgage With Bad Credit History of Defaults?

Defaults are more serious than a late payment but aren't always a deal-breaker for remortgaging.

Can I remortgage with bad credit history through a high street lender? It is common for high street banks to reject any applicant with defaults, so a specialist lender is usually your best bet.

Lenders will consider when the defaults happened, why, and how serious the amounts involved were.

When Can I Remortgage With Bad Credit History of CCJs on My Credit File?

Again, it all comes down to when the CCJ was registered and whether you have now satisfied the debt. Some bad credit lenders will consider a mortgage within a couple of years of a CCJ, although mainstream lenders will typically need several years to have passed.

CCJ remortgage applicants will need a high deposit to offset the lender's risk - usually at least 25% of the purchase value.

The longer ago the CCJ was registered, the more likely you would be approved for a remortgage.

Can I Remortgage With Bad Credit History Including a Current IVA?

If you have an IVA and can show that you have made repayments on time for at least a year or two, you may be eligible for a remortgage.

Lenders all have different policies about IVA lending, so it is essential to be upfront about why you are in or have had an IVA and show that you are now managing your finances responsibly.

Can I Use a Secured Loan to Repay my IVA?

Potentially, you can consider a second charge mortgage to raise funds needed to settle the remaining debt on your IVA. Specialist lenders will look at your recent credit history to determine whether they can offer to lend.

Secured loans are more flexible than mortgages, and you can usually borrow up to ten times your annual income. In contrast, a mortgage is typically limited to four or five times your yearly earnings.

How Can I Remortgage With Bad Credit History After a Debt Management Plan?

Remortgaging can be an option if you are in a DMP and want to raise funds to pay back your debts. You can also refinance when the DMP has been paid, provided you meet the lender's criteria.

Most remortgage lenders will offer a loan with a 15-20% deposit if you have a DMP on your credit file. The higher your equity and the lower the LTV you are applying for, the greater your remortgage prospects.

Can I Remortgage With Bad Credit History of Bankruptcy?

Bankruptcy is a serious credit issue, and most high street mortgage lenders won't offer a loan to anybody with bankruptcy on their credit file - no matter how long ago it happened!

Specialist bad credit lenders will consider a remortgage following bankruptcy and can even offer to lend within a year or two of the bankruptcy being discharged.

Can I Remortgage With Bad Credit History Including Repossessions?

Repossessions can happen for a broad number of reasons. We often work with clients who lost their home during the credit crunch and are now in a position to look at remortgaging or buying a new property.

As with bankruptcies, repossessions are serious, so you will almost certainly be rejected if you apply directly to a mainstream lender. The key is to assess your repossession history, explain what and why it happened, and apply to a bad credit lender who will be able to consider your remortgage requirements.

Can I Remortgage With Bad Credit History on a Good Rate?

The best way to ensure you get the best remortgage rates is to work with a whole-of-market broker. We have access to every mortgage product, offer, interest rate and lender on the market, so we can make an independent assessment about which home loan is best suited for you.

Tips for How to Get a Remortgage With Bad Credit

  • Avoid applying to your bank - they will nearly always reject a bad credit remortgage application, and you'll have another hard credit check on your file to boot.
  • Access your credit reports, and make sure they are entirely up to date and accurate.
  • Calculate your Loan to Value - how much you want to borrow vs your equity - before applying for an unrealistic remortgage amount.
  • Work on improving your credit score. You can register to vote, avoid borrowing up to the limit on your credit cards or overdraft or consider an adverse credit borrowing card designed to help you build up a history of responsible borrowing.

Expert Advice on How to Get a Remortgage With Bad Credit

If you've wondering, can I remortgage with bad credit history or have been turned down for remortgage financing, all is not lost.

Given Revolution Brokers a call on 0330 304 3040 or email us at [email protected]. We'll work with you to present a compelling application to the most suitable lenders to ensure you get the bad credit remortgage funds you need.

When Can I Remortgage With Bad Credit History?

Timing may be important, particularly if you’re concerned about a fixed-term mortgage coming to an end and falling into a much higher interest rate category. When can I remortgage with bad credit history may depend on whether you are locked into a fixed-rate deal, or whether your credit score is likely to improve in the near future – please get in touch for more tailored guidance.

Can I Remortgage With Bad Credit History With Help From a Broker?

In most cases, yes, an independent broker can help you assess your finances and circumstances, recommend niche bad credit lenders and suggest solutions that will help you find a suitable remortgage.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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