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What Can I Do if I Can’t Remortgage Due to Affordability?

If you can’t get a remortgage or have been turned down by a lender, your initial response may be to assume that you cannot remortgage and need to consider what can I do if I can’t remortgage due to affordability.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2023-05-09
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Options when unable to remortgage due to affordability

If you can’t get a remortgage or have been turned down by a lender, your initial response may be to assume that you cannot remortgage and need to consider what can I do if I can’t remortgage due to affordability.

The first advice we’d offer is that, even if you can’t get a remortgage through a bank or mainstream lender, there are very likely to be specialist bad credit lenders or those focusing on non-standard properties that can help.

Revolution Finance Brokers regularly works with clients worried that they can’t remortgage due to affordability, effectively mortgage prisoners stuck with excessively high mortgage costs and no opportunity to refinance elsewhere.

Let’s look at some of the reasons you may have been advised you can’t get a remortgage and what you can do to improve your long-term financial position.

Why Have I Been Told I Can’t Remortgage Due to Affordability?

Affordability assessments don't necessarily rely on credit scoring, and although you might need to consider can I remortgage with bad credit UK, affordability is a different metric.

In essence, if you can’t remortgage due to affordability, it means your income, or average annual earnings, aren't high enough to meet the lender's eligibility. Most remortgage providers will offer a maximum of four or maybe five times your income, so if you'd like to remortgage for more, they'll automatically turn you down.

Other reasons you’ve been told you can’t remortgage due to affordability could simply be that the lender you've chosen excludes all bonuses, commissions and regular overtime in their calculations, so they are assuming you can't afford the remortgage based solely on your basic salary.

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Based on your yearly income,
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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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Depending on your personal circumstances, some lenders may let you borrow 5 times your salary.

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Lenders usually cap the amount they lend at 5.5 times your salary, so it’s unlikely you’ll be able to borrow more than this.

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Why You Can’t Get a Remortgage With a Stable Income

Just as some first-time buyers find being turned down for a mortgage incredibly frustrating because they're already paying more than the mortgage repayments in rent, finding you can’t get a remortgage can be very difficult.

There are likely more reasons than you might imagine that you could be told you can’t remortgage due to affordability, even if your income and finances are stable and relatively high. Examples include:

  • You can’t get a remortgage because you’ve nearly paid off the loan. Lenders aren’t keen on applicants with low balances because the interest they stand to earn on your business isn't worth the administrative time it might take to assess your application.
  • You can’t remortgage due to affordability because the lender won't consider a variable income. Niche lenders normally average out your annual earnings. In contrast, a bank will often consider only your basic salary, disregarding bonuses or other income that makes up a large proportion of your means to repay a remortgage.
  • Can I remortgage with an IVA or other bad credit history? Adverse credit can make it difficult to remortgage with a bank since any issues on your credit report will mean they perceive your application as high risk.

Is remortgaging easier than getting a mortgage? Generally, yes, but if you would like to borrow at too high a Loan to Value (LTV) ratio, you might find you can’t get a remortgage for as much as you want. The LTV is the difference between your property’s value and your outstanding mortgage.

Lenders tend to set LTVs up to a maximum of 90%, so even if you’re confident you can keep up with the repayments, a lender might decide you can’t remortgage due to affordability because your requested loan is higher than their thresholds allow.

What to Do if You Can’t Get a Remortgage

The first step, if you’re advised you can’t get a remortgage or are concerned that you can’t remortgage due to affordability, is to speak with our independent team to evaluate the potential solutions.

There may be simple options, such as applying to a lender whose affordability criteria align with your circumstances or where there are remortgage products with the LTV you would like to borrow.

You may also be able to improve your chances of approval by assessing why you can’t get a remortgage and taking proactive changes to strengthen your application.

1. Check Which Lenders You Can’t Get a Remortgage With

Even if your application looks clear and straightforward, if it doesn’t fit within the lender’s policies, they will automatically decide you can’t get a remortgage with them or can’t be approved for the specific product you have selected.

As a whole-of-market broker, we start with your requirements and circumstances and then find the right lenders and products to suit rather than applying with the hope that the outcome will be positive.

2. Improving Your Finances if You Can’t Get a Remortgage

Making overpayments on your current mortgage (where permitted) and maintaining a good history of on-time payments can help if you are able to delay your remortgage for a short period. Reducing your mortgage balance means you can remortgage for a lower value, which could solve the reason you can’t get a remortgage.

Paying down short-term debts such as credit cards and overdrafts will also help if you can't get a remortgage due to affordability because of other debt repayment obligations.

Reducing outgoings and working on a household budget can also be a good way to improve your financial position ahead of a new application if you’ve been told you can’t get a remortgage because your income less outgoings is not sufficient.

3. Repairing Your Credit Score if You Can’t Get a Remortgage Due to Your Credit History

Credit scoring is slightly different from affordability but can be a factor in why you can’t get a remortgage because a low credit score or history of adverse credit issues will mean some lenders cannot offer a remortgage at all, and others will charge higher interest rates.

Registering to vote, repaying debts, removing errors from your report and making on-time payments can help improve your credit score if you're worried about can I remortgage with an IVA on my file or any other credit events.

Professional Help If You Can’t Remortgage Due to Affordability

Finding out you can’t remortgage due to affordability can be disheartening, but there are often options to apply to a more suitable lender, or for a better-aligned product, or to look at your circumstances and mortgage position to decide on the best route forward.

Please contact Revolution Finance Brokers at your convenience if you can’t get a remortgage and would like support.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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Frequently Asked
Questions

In most cases, you can remortgage even if you have bad credit or a low credit score, although you may have a smaller selection of lenders offering adverse credit remortgage products to choose from. Most lenders that will accept bad credit applicants also charge higher interest rates to offset the additional risk.

Remortgaging costs vary but include valuation fees, product charges, broker's commission, and administrative and legal fees. Many lenders offer remortgage deals with inclusive fees, which can make remortgaging cheaper.

Affordability is different from credit and means the lender believes your income isn't high enough to cover the remortgage payments when stress-tested with a higher interest rate. Lenders usually cap remortgage lending based on three to five times your annual income or up to 90% of the property value.

Lenders often have early settlement clauses in mortgage contracts, which means you incur a fee of 5% of the outstanding balance if you try to exit the agreement before a fixed term comes to an end. Some lenders may be willing to negotiate or waive an early settlement charge if you are remortgaging onto another of their products.

It can do, yes. Lenders will assess your other debts before making a remortgage offer. If a separate loan is secured against your property, they will need to look carefully at the charge and what that might mean if they were to repossess the home to recoup unpaid mortgage arrears.

If you cannot remortgage, you'll normally stay with your current provider and switch to their SVR, a higher interest rate than you'd expect to pay through a fixed-term contract. However, there are usually options to remortgage, either by selecting a more appropriate lender or revising your application.

Generally, remortgaging is straightforward because you aren't physically moving properties. You will normally have accumulated equity in your home by making repayments against the mortgage balance and due to property appreciation.

Yes, remortgaging can raise capital to pay for home improvements and other costs, consolidate debts, or repay an outstanding Help to Buy equity loan.

Lender attitudes to adverse credit events such as an IVA vary, but it is easier to remortgage once you have settled or discharged any credit issues such as an IVA, CCJ or DMP. Applying to a bad credit specialist lender may be advisable if you are currently within an IVA. However, some lenders will be happy to consider the application provided your finances have since remained in good order.

Hiring a solicitor or conveyancer isn't mandatory. Still, most people use a solicitor to deal with the mortgage and title deeds, register the remortgage with the Land Registry, and carefully check through the remortgage offer.

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FCA disclaimer

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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