Remortgaging with Bad Credit: A Complete Guide
Handing the keys over to homeowner

If you’ve already attempted remortgaging with a low credit score, then you may have already faced rejection from a mortgage lender or been denied help from a mortgage broker.

In this instance, it can be incredibly disheartening, but it’s important to know your options when it comes to renewing your mortgage or obtaining a poor credit remortgage.

In our guide on how to remortgage your house with bad credit, we explain how you can remortgage a house with defaults and remortgage a house with a CCJ, plus how to improve your credit score to increase your chances of successfully remortgaging you rhome with bad credit.

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Can I remortgage if I have bad credit?

While it certainly is more difficult to remortgage your home with bad credit, it is still possible, although you won’t be offered the most competitive rates as you would if you had a good credit score.

In most circumstances, people in this situation usually have two options; to either remortgage for debt consolidation or to take out a second charge mortgage for borrowers with bad credit.

What is adverse credit history?

Adverse credit history can contribute to your chances of not being accepted for a remortgage and it occurs when numerous factors are reported to a credit reference agency.

These factors can include:

  • Defaults
  • CCJs
  • Late repayments
  • Low credit scores
  • Bankruptcy
  • Repossession
  • Mortgage arrears

How do I remortgage with bad debt?

To increase your chances of being able to remortgage with bad debt, there are several things you can do.

Increase your credit score

One of the best and most effective ways to increase your chances of remortgaging is to increase your credit score. Of course, it goes without saying that if you’re trying to get a remortgage with bad credit, your credit score is probably not in the best position, but working to try and improve it can help to improve your overall chances of being able to remortgage your home.

One way you can do this is to obtain an adverse-specific credit card that effectively acts as a loan where you’re spending and then repaying that money each month. Doing this proves to credit lenders that you’re able to make repayments on time and gradually, you should start to see your credit score improve.

Obtain your credit reports

Another important step to take when it comes to remortgaging with a bad credit history is to obtain your credit reports so that you can get a better understanding of what you’re working with so you know where to focus your efforts.

You won’t be penalised for searching for your own credit file with dedicated credit reference agencies such as Experian or Equifax, so it’s a good way to see the factors and issues that will affect you, and that way, you can find out how to overcome them.

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Don’t go to your bank

While it might seem like the easiest option to go straight to your bank when looking to remortgage, it can actually have a negative effect on your credit score.

This is because the mortgage market is so competitive and your bank will really try to gain commitment from you so if they manage to credit check you but then don’t offer you a remortgage due to your bad credit, as they’ve performed a credit check on you, this will go on your file and negatively impact your score even further.

It’s best to avoid going to your bank altogether and instead try to obtain financial advice from a remortgage-specific broker who can give you the best advice on what to do.

You might like: What things can have an impact on your credit score?

Can you be declined a remortgage?

Your remortgage proposal may be declined for a number of reasons, including if you have a low mortgage balance, if you have a bad credit history or if you have a high loan-to-value ratio.

If you’re coming to the end of your mortgage term and you don’t have a lot left to pay, then you may be declined a remortgage as you won’t likely save much money by switching anyway.

Your loan-to-value ratio is the difference between your outstanding mortgage balance and the current value of your property, so the more money you borrow against your property, the higher your loan-to-value ratio will be, which in turn means it will be harder for you to remortgage your home.

Of course, one of the most common reasons for being declined a remortgage is due to bad credit history as it shows how well (or how bad, in this case) you’ve managed money in the past. 

While having bad credit can affect your chances of remortgaging, it’s important to note that it won’t last forever, so if you’ve had any defaults or marks on your credit file in the past, these won’t last forever and the more time that passes, the less impact it should have.

I have equity but bad credit

If you have equity available but bad credit, then it can prove to be very difficult to remortgage your home.

In this instance, lenders may decide to offer you a second charge mortgage in order to release money.

Can I get a mortgage if I have bad credit but a good salary?

While mortgage lenders do certainly take your income and employment status into consideration when it comes to giving you a mortgage, your credit status is arguably the most important factor, so regardless of how good your income is, if you have bad credit, this could still seriously impact your chances of being accepted for a mortgage.

The best bad credit remortgage rates

If you’re looking for the most lenient mortgage lenders, check out the list of the best bad credit remortgage lenders and their rates below.

  • MBS Lending Ltd 2 Year Discount - initial rate of 2.99% for 2 years.
  • Mansfield 2 year discount remortgage - initial rate of 3.39% for 2 years.
  • Darlington Building Society 2 year discount - initial rate of 3.49% until 31st August 2023.

If you're really unsure what type of mortgage deal would be best for you, we highly recommend getting in touch with either a reputable financial advisor or mortgage broker, as they'll be able to give you the best advice and help you find the best deal suited to your budget and needs.

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