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Can I remortgage with bad credit?

Are you struggling with bad credit? You’re not alone. Remortgaging with poor credit can feel daunting, but it’s not impossible.

At Just Mortgage Brokers, we specialise in turning financial roadblocks into opportunities. Whether it’s improving your credit score or finding the right lender, we’re here to help you navigate your options.

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Author: Carl Shave - CEO and co-founder
Last updated: 19 Dec 2024

Remortgaging with poor credit

If you have suffered with financial problems since your initial mortgage, you might find that certain doors are now closed to you. That will also likely include the door to your existing lender.

Most lenders treat bad credit remortgage applications the same as initial mortgage applications from people with bad credit. Having a poor credit history or score indicates poor money management skills, making individuals a risky choice for lenders.

Negative credit events impact a person’s credit score. However, they should not be viewed as a permanent barrier to remortgaging.

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Bad Credit Topics

Whether it be late payments, defaults or CCJs, we’re here to help you secure a mortgage.

Mortgages with Bad Credit

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Mortgages with a Default

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Mortgages with CCJ

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Mortgage with a Debt Management Plan

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Mortgage after an IVA

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Mortgages after Bankruptcy

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Mortgages after Repossession

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Mortgages with a low Credit Score

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How to get a mortgage with Bad Credit

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Mortgages with Late Payments

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Mortgage with Payday Loans

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Mortgage With Missed Payments

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Bad Credit Mortgage Advice

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Bad Credit Mortgage Calculator

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Bad Credit Mortgage guide

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Lenders for remortgaging with poor credit

Remortgaging can have added complications if the applicant has a bad credit score. The good news is that some mortgage lenders will consider applications from people in this situation. In recent years, there has been more choice as lenders are more willing to lend to these individuals. Your overall situation will be used to determine your own possibilities.

High street lenders have their own criteria to determine an individual’s credit score. Based on this, they will say ‘yes’ or ‘no’ to a remortgage application. If the decision isn’t clear-cut, they might say ‘yes’ but charge higher fees and/or a higher interest rate.

Take the first step towards financial peace of mind by speaking with one of our experienced advisors. Together, we’ll work to find the right remortgage solution for you.

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Is it better to improve my credit rating before I remortgage?

You can help your case by taking steps to improve your credit rating before applying for a remortgage by:

  • Correcting errors on your credit report
  • Paying off as much debt as possible
  • Keep up to date with your regular payments on bills and existing credit
  • Closing any unused credit accounts
  • Exploring ways to increase your income

These actions demonstrate financial reliability, which can help lenders view you more favourably. While some specialist lenders might still approve a remortgage with bad credit, improving your score could unlock more competitive interest rates.

We’ve helped many homeowners remortgage despite credit challenges, and lenders will assess each case individually.

Arguably, one of the best things you can do before remortgaging is to improve your credit score. Improving your credit score does take time and persistence, but even small changes can make a difference. For tailored advice, consider consulting a qualified advisor. Here are some immediate steps to help get your credit rating back on track:

  1. Check your credit report from Experian, Equifax and TransUnion. Each may hold different details so ensure the details they hold are correct.
  2. Regularly update the personal details held on your credit report with each agency, such as your address and email address.
  3. Make sure you are registered on the electoral roll; this helps to confirm your identity and improve your credit score.
  4. Manage your credit card balances; ideally, aim to pay more than the minimum and stay below 50% of your credit limit.
  5. Make sure you pay your bills on time; timely payments show reliability and improve your credit history.
  6. Cancel all lines of credit that are not in use, for example store cards or inactive credit accounts, to reduce potential risks.
  7. Build up a positive credit history by utilising a dormant credit card to buy petrol or groceries. Make sure you pay it off in full every month, don’t build up additional debt.
  8. Resist the temptation to take out payday loans. They are seen as red flags by lenders, signalling financial instability.

For more suggestions as to how you can repair your credit rating, check out our simple tips page.

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If you’re planning to remortgage soon, some short-term actions can provide a quick lift to your credit score:

  • Settle small debts: Pay off any small debts or overdue bills to clean up your report.
  • Ensure timely payments: Even a few months of consistent on-time payments can positively impact your score.
  • Reduce credit utilisation: Keep your credit card balances below 50% of your limit.
  • Check your credit report for errors: Correct inaccuracies with all three major UK credit reference agencies.

These quick fixes can demonstrate improved financial management, making you a more attractive candidate to lenders.

Every application for a mortgage or a remortgage is subject to an affordability assessment. This is the case no matter what your credit status might be. Potential lenders look at income versus outgoings, taking everything into account to understand your affordability. Since June 2014, the FCA’s recommendation is that the debt-to-income ratio should be no higher than 45% [1] for an offer of a mortgage or remortgage to be made.

Can I remortgage if my property value has dropped?

If your property’s value has decreased since your initial mortgage, you may find yourself close to or in negative equity. This situation can make remortgaging seem daunting, but options do exist:

  • Specialist lenders: These lenders may consider your application even if your loan-to-value (LTV) ratio is higher than what traditional lenders accept.
  • Equity boosting strategies: If possible, consider overpaying on your current mortgage to reduce the outstanding balance and improve your equity position.
  • Government schemes: In some cases, there may be schemes designed to help homeowners manage negative equity

While remortgaging in these circumstances might involve higher interest rates, it could still help you consolidate debts or secure better mortgage terms in the long run. A mortgage broker can help navigate these complexities.

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How economic factors affect bad credit remortgaging

Economic changes, such as rising interest rates or inflation like we have seen recently, can significantly impact remortgaging [2], especially for those with bad credit. These shifts affect the affordability of loans and the terms lenders are willing to offer.

Here’s how it might affect you:

  • Rising interest rates: Lenders might increase mortgage rates, leading to higher monthly payments. This can make securing a competitive deal more challenging for individuals with poor credit.
  • Inflation and cost of living [3]: Higher living expenses can strain budgets, affecting your debt-to-income ratio and, in turn, your remortgage eligibility.

What can you do?

  • Consider a fixed-rate remortgage to lock in predictable payments for a fixed term.
  • Use tools like budget planners to assess your financial resilience under changing conditions.
  • Work closely with a bad credit mortgage broker, who can find the best deals in a fluctuating market.

How can I remortgage with bad credit?

There are lenders who specialise in working with people with low credit scores. They offer deals that you can’t get from regular lenders. So, how does bad credit affect remortgaging?

In many cases, to get a remortgage deal you will have to go to a lender that specialises in mortgages for defaults.

The terms you can get for a remortgage with defaults may be influenced by:

  • the amount of money in the default
  • how long ago the default notice was served
  • if there is any amount still outstanding
Getting a Mortgage with a Default

A County Court Judgement is one of the more severe adverse credit events that can be registered against your name. You will find it more difficult to apply for a mortgage with one on your record. However, it’s possible to get a remortgage, even if you have one or more CCJs on your credit file.

Every lender will have their own criteria for assessing your case. They will take into consideration all these factors in combination to make a lending decision:

  • when the CCJ was registered
  • the number of CCJs
  • how much money is/was owed
  • if it was satisfied
  • the age of the CCJs
Getting a Mortgage with a CCJ

It’s entirely feasible for people with a DMP to successfully apply for a remortgage on their property. You might have to go to a little more trouble than for a standard remortgage. With access to the right lender, you should be able to find the right product to meet your needs.

Getting a Mortgage with a DMP

Trying to obtain a remortgage after completing an Individual Voluntary Arrangement (or IVA) can seem like a huge challenge. If you are with a high street lender, it’s likely they will decline your application for a remortgage.

Fortunately, there are a range of specialist lenders who cater to people who have completed an IVA. The key factor with getting a remortgage after an IVA will be affordability.

Getting a Mortgage after an IVA

If you have been declared bankrupt in the past, and the bankruptcy has been discharged, you should be able to apply for a remortgage. Your options could be restricted depending on a few factors.

You will need to work with a specialist mortgage broker, who will be able to assess your circumstances and advise you on what will be the right option for you.

Getting a Mortgage after Bankruptcy

How soon can I remortgage after improving my credit?

If you’ve recently taken steps to improve your financial situation, you might wonder how soon you can remortgage. The good news is that many lenders consider your most recent financial behaviour when assessing your application. However, the time frame required to see tangible benefits varies depending on the type of credit issue.

Here’s what to keep in mind:

  • Defaults or CCJs [4]: Some lenders may require these to be at least 6-12 months old, while others could accept applications sooner if they’ve been satisfied.
  • IVAs or bankruptcy [5]: Lenders typically prefer a longer gap, often two years post-completion, though specialist lenders may offer solutions sooner.
  • Improved credit scores: Visible changes in your credit score, like clearing debts or resolving errors, can positively impact your application within a few months.

By working with a specialist mortgage broker like Just Mortgage Brokers, you can explore options tailored to your specific timeline.

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Bad credit remortgage FAQs

Unless you’re making legal changes to your property ownership, there is usually no need to have legal representation. However, the new lender will require a conveyancing solicitor to be involved. This is to ensure all the legalities are in order before they take on the debt.

You may be aware of relevant legal matters from your previous home purchase or remortgage. If so, it can be best practice to notify your broker or lender in advance so they can be prepared. The legal work is mostly for the new lender, so many offer packages that cover standard legal costs.

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If you remortgage to a new deal with a different lender, then you may be able to borrow extra money depending on the equity available in your property, the lender’s maximum loan-to-value (LTV) ratio, and your ability to afford the repayments.

Some people remortgage to consolidate and clear existing debts such as unsecured personal loans and credit cards. This can have the advantage of reducing the amount of interest you are being charged on your outstanding debt, as mortgage interest rates are usually considerably lower than the interest rates charged on unsecured borrowing.

If you are considering remortgaging to clear your debts, it is important to remember that you may be repaying the amount you owe over a much longer term, and that even at a lower rate of interest, you might actually end up paying more in the long term. By securing the lending against your property, you also risk losing your home should you fall into arrears on your mortgage repayments.

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If you have sufficient equity in your property, it may be possible to remortgage and borrow extra money to pay off money you owe your creditors. However, if you have existing credit problems, such as defaults or CCJs, you may find it more difficult to get a mortgage or to qualify for better mortgage deals.

There are, however, lenders on the market who specialise in mortgages and remortgages for people with a poor credit history. You also need to be aware that by securing additional lending against your property, you may be at risk of losing your home if you fail to make your mortgage payments.

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If you have sufficient equity in your property and a tax bill to pay, it may be possible to remortgage and borrow extra money to pay the amount you owe to HM Revenue & Customs. It’s important to be aware that each lender has its own set of lending criteria, and at the time of writing, most lenders will not lend on a remortgage to clear an outstanding tax bill.

However, there are lenders in the market who are happy to lend for this purpose; using a mortgage broker with experience of different lenders and their lending policies is the easiest way to start looking for a mortgage for this purpose. Be aware that by securing additional borrowing against your property, you risk losing your home if you fall into arrears on your mortgage payments.

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Most mainstream lenders do not allow money raised on residential mortgages or remortgages to be used for business purposes or investment. However, some more specialist lenders do accommodate remortgaging for business purposes; mortgage brokers with access to the whole mortgage market should be able to connect you with a lender who can help. However, it is important to be aware that by securing business-related borrowing against your property, you risk losing your home if your business or cash flow should run into problems.

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If you currently have a standard residential mortgage on your property, it’s possible to remortgage to a new Buy-to-Let mortgage with a different lender, even if you have a poor credit history.

However, it’s important to be aware that affordability assessments for Buy-to-Let mortgages are much stricter now than they have been previously. This is because of tougher rules set down by the Financial Conduct Authority and the Bank of England. A history of adverse credit could potentially hinder your chances of getting a mortgage.

Using an impartial mortgage broker can increase your chances of finding a lender able to accommodate a poor credit score.

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Just Mortgage Brokers have experience of working with property owners at all levels, from those who are relatively new homeowners to highly experienced landlords with extensive property portfolios.

We know exactly where to turn to find a mortgage to suit the particular needs of every client, regardless of your credit history.

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[1] FCA (February 2020) Changes in the mortgage market post 4.5 limit on loan to income (Accessed 11.11.24)

[2] Bank of England (10.05.24) Interest rates and Bank Rate (Accessed 11.11.24)

[3] Office of National Statistics (updated monthly) Inflation and price indices (Accessed 11.11.24)

[4] MoneyHelper (n.d) What to do if you’re refused a loan or credit card (Accessed 11.11.24)

[5] Citizens Advice (18.02.21) Check if going bankrupt is right for you (Accessed 11.11.24)

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