Remortgage with Bad Credit

If you have bad credit, you may think you are not able to remortgage, but it is possible. It may be easier for people with good credit to remortgage, but there are lenders out there that will work with you. People find themselves with bad credit for many reasons. It can affect the loans or remortgage deals you qualify for; however, there are options available.

Remortgaging with poor or bad credit

While many lenders will not be forthcoming with offers for remortgaging with bad credit, it doesn’t mean you won’t be able to get the loan you need. Bad credit is an issue for banks because bad credit makes you:

  • Seem a higher risk to lenders
  • More difficult to get loan approval
  • Additional work is required for bad credit remortgage offers

Although bad credit does make banks cautious, some financial institutions are willing to look past this. Bad credit history doesn’t always mean you can’t handle remortgage payments. Some lenders are able to consider these problems and still offer remortgaging services.

Independent financial advisors will be able to point you in the right direction. They will know which banks specialise in remortgages for people with bad credit.

Should I remortgage if I have bad credit?

Taking out a remortgaging offer can be beneficial for many reasons. However, it depends on your financial situation and why you are looking to remortgage. The main reasons people look for a remortgage deal include:

  • Moving to a better mortgage rate
  • To raise capital 
  • Debt consolidation
  • Releasing equity

As mortgage deals change all the time, your current agreement may not have the best interest rate. Looking at remortgaging can help reduce the overall payment you will have to make. You may want to make a large purchase or have a big event coming up. A remortgage can give you the extra money you need for this.

Debt consolidation remortgages are a very popular solution. People with multiple loans and credit card debt can benefit from moving everything onto a remortgage. Lower interest rates and paying the deficit over the term of the mortgage help regain control of finances. 

You may have equity in your home but don’t want to sell it to release the capital. Remortgaging can release the equity in your home, giving you access to that cash, without moving.

How to remortgage with bad credit

Not everyone has the same credit problems so your situation will need to be considered when looking at remortgaging. There may be a simple solution to get you a good deal, or other action may be required. Here are some simple steps to get you started:

Your credit report

A first step to getting a bad credit remortgage deal is to check your credit report. Credit reference agencies hold information on your debts and payment histories. The bank will use this to consider whether you will qualify for a remortgage.

By looking at your credit file, you can see what issues are on there. It is also vital to check it thoroughly. If there are any items on there in error, you can inform the credit reference agency. Cleaning up any issues or clearing debts can improve your credit score. Check out our 7 tips to improving your credit score.

FriendsCapital has partnered up with checkmyfile – the UK’s only multi-agency credit report – check your credit report.

Look at your options

While it may seem the best idea is to go to your current bank, this isn’t always advisable. High street banks and lenders tend to favour people with good credit. Remortgage applications with your bank may be more likely to be refused. There are several lenders and bad credit remortgage companies that will be more suitable for you. 

A bad credit loan is more of a specialist solution to debt management. Therefore you will want to use an expert advisor. They will have knowledge of the best lenders to approach and which application is more likely to be successful.

Know what you can afford

 It may seem obvious, but you will need to consider what you can afford. Depending on your income, your remortgage will have to be within your limits. Your financial situation should remain the same or get better with the new offer, so make sure you know what payments you can handle.

Lenders assess income differently, so a financial expert will be able to go through this with you. Generally, you will be able to get around 4x your income. Your fixed salary is usually only considered so overtime or bonus payments won’t form part of the calculation. Similarly, if you are self-employed, some lenders may not consider you for a remortgage. The advisor will be able to approach the right lender based on your situation.

Can I remortgage with a CCJ?

Yes, you can. If you have a CCJ, lenders will consider you to be an increased risk. A CCJ does not mean you will be refused a remortgage; however, it might mean you are not able to get the best rates. Friends Capital work with lenders who specialise in adverse credit; these lenders work with people who have a poor or bad credit history. Speaking to an independent advisor, like Friends Capital, is recommended.