Bad Credit Remortgage 

Can I remortgage without a credit check?

In most cases, no. When you remortgage with a new lender, that lender will usually want to carry out a credit check as part of their initial assessment. Having said that, though, your existing lender will usually offer what’s called a product transfer. Here, you’re not fully remortgaging; you’re just switching products with that lender. In that situation, there generally wouldn’t be a credit check. A full remortgage generally constitutes moving your funding from one lender to another, and in this case, a credit check would be completed.

Can I remortgage with arrears?

Potentially, yes, but it will be more challenging. Lenders will look closely at the situation, especially if there are recent arrears. How many months of arrears were there? Were they on the actual mortgage or on another credit commitment? Is the account now back up to date? Recent mortgage arrears will be viewed more seriously than older or isolated events. However, on a positive note, some lenders are more flexible than high street banks and building societies. If there is a clear explanation of why the arrears occurred and there’s sufficient equity in the property, they may be a bit more lenient.

What is a bad credit score? Is there a general definition?

Not really. The credit bureaus are also confusing matters by increasing the score limits. There isn’t a single number where, if your score is above 500 or 700, etc., your credit is good. Also, every lender has a different system behind the scenes that examines different elements of your credit profile. It isn’t necessarily the credit score that matters; it’s more about what’s creating that score. Are there missed payments, defaults or County Court Judgments? Is there a historical IVA or a bankruptcy, and how recent are those issues? You might have high unsecured debt. Simplistically, if your score with a credit agency isn’t as favourable as you would like, it’s likely to be the same with a lender. But that doesn’t mean the answer will be no. It just means that a broker will want to investigate it and look at the details. Generally, there will be solutions out there – we just need to look a little bit wider.

Can you release equity with bad credit?

Yes, releasing equity with bad credit is possible, but lender choice may be more restricted, and interest rates may be a little higher. Lenders will look at how much equity is in the property, whether the new borrowing is affordable and the type and age of any adverse credit. Equally, they will want to know what the funds are being raised for.

Can I remortgage if my partner has bad credit?

Yes, probably, but it depends firstly on whether you both have bad credit, and how bad that is. If it’s a scenario where one person has good credit and the other has bad credit, we need to know what the issues are. That’s how we would identify a lending solution.If there isn’t a solution, is there an option to revert to the other person and just take a mortgage in their name? Is that affordable? It’s best to know all the details and then make a judgment on what could be achieved.

How does credit card debt affect a remortgage? How will credit card debt affect my mortgage application?

Credit card debt tends to affect remortgaging in two key ways: the affordability, and how it affects your credit profile. Lenders will look at outstanding balances, how much the monthly repayments are and how heavily the individual was reliant on revolving credit. High balances, borrowing close to the limit or missing payments can very much reduce how much you can borrow. It can also narrow lender choice. But having credit card debt does not automatically prevent a remortgage. High utilisation and recent payment issues can make it less attractive for lenders and make it trickier to get approved, but it’s possible.

Can you consolidate credit card debt twice?

It is possible, but lenders will look very carefully at the application if it’s the second time around. If you’ve previously consolidated unsecured debt into a mortgage and now you want to do it again, lenders will want to understand why the debt has built up again and whether the new arrangement is sustainable. Repeated debt consolidation can be seen as a risk factor. It’s also important to remember that moving unsecured debt onto a mortgage secures it against your home – and often means you’re paying interest over a much longer period of time. Lenders don’t like two or three attempts at this. They understand that people can have a situation that causes them to fall behind on debts. You can consolidate those and reduce the monthly costs. But if you’re coming back two years later with the same issue, they’re going to look at it very seriously.

Is it better to have a personal loan or credit card debt when remortgaging?

Neither is automatically better. Lenders look at the overall picture rather than one type of debt in isolation. A personal loan can be viewed more positively if it’s a fixed-term loan and is being repaid as agreed. But in reality, they’re both financial commitments and one probably isn’t seen to be worse than the other.

How does remortgaging a Buy-to-Let work with bad credit?

Remortgaging a Buy-to-Let with bad credit is possible, but lenders usually assess both your personal credit history and the strength of the investment. Buy-to-Let lenders focus on rental coverage, by looking at the Loan-to-Value, the outstanding mortgage balance and whether the rent covers the mortgage payments. Equally, the landlord’s level of experience and the severity and timing of any adverse credit are important. Bad credit can limit lender choice and can increase pricing, but lenders may accept it if the mortgage is sustainable.

How can a mortgage broker help with a remortgage? Any final thoughts?

If you have some adverse credit in the background and you’re not sure about it, speaking to a broker will help. There are lenders out there, not necessarily on the high street, who focus on this particular market sphere. So if you’re in any doubt, speak to a broker.

Key Takeaways:

• Remortgaging with bad credit is possible, often through lenders who design products for people with missed payments, defaults, or other credit issues. Mainstream banks may be more cautious.
• Working with a broker is crucial; they can guide you to lenders open to bad credit and help you avoid wasted applications that could further damage your credit score.
• Past issues like bankruptcies, CCJs, IVAs, or defaults can be considered, especially if they have been settled or are several years old. Lenders’ appetites for risk tend to increase over time.
• Interest rates will likely be slightly higher due to increased risk, but debt consolidation can help reduce overall monthly costs.
• The application process is similar to a standard mortgage but requires more detailed documentation. Be upfront about your credit history, provide a rationale for ‘blips’ and have your documents prepared for a smooth process.
• A full remortgage (moving funding to a new lender) generally requires a credit check, but a product transfer (switching products with your existing lender) typically does not.
• Remortgaging with arrears is possible but will be more challenging, as lenders focus heavily on recent arrears. However, some lenders are more flexible than high street banks if there is a clear explanation for the arrears and sufficient equity in the property.
• There is no single general definition of a ‘bad credit score,’ as lenders use different systems to examine the elements creating the score (such as defaults or missed payments) rather than just the number itself.
• Releasing equity with bad credit is possible, but this may restrict lender choice and result in higher interest rates. Lenders will consider the amount of equity, affordability, the type and age of adverse credit, and the purpose of the funds being raised.
• Consolidating unsecured debt into a mortgage a second time is possible, but lenders will look at the application very carefully and see repeated debt consolidation as a risk factor. They want to understand why the debt has built up again and ensure the new arrangement is sustainable.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.

YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST BUY-TO-LET MORTGAGES.