Remortgaging with Bad Credit

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Bad Credit Remortgage (Part 1)

Sam Camozzi explains how remortgaging with bad credit works in a two part episode.

Can you remortgage with bad credit? If so, how can I remortgage with bad credit?

People see bad credit in different lights, but you can definitely remortgage with bad credit, depending on what the situation is.

How you remortgage with bad credit is essentially about speaking to us – we’ll look at what is actually on your credit file. That will shape how we approach it and what lenders we look at. In short, yes, you can remortgage with bad credit, but it all depends on the specifics.

Can you be declined a remortgage?

Yes, you can be declined a remortgage – whether you’ve got bad or even good credit, actually. There could be a number of different reasons, but you could be declined if there is some element of ‘non-disclosure’ in the mortgage process.

Essentially, if there’s anything you’ve not shared with us when we’re looking at the remortgage – perhaps a default or a CCJ on your credit report – it does make our job more difficult.

It’s imperative we have that information up front to provide the most suitable advice. That way, we’re minimising any risk of a decline.

Can you get a remortgage after bankruptcy or with a CCJ, IVA or default?

Bankruptcy and Individual Voluntary Agreements (IVAs) are probably the most serious things lenders would see on a credit report.

Lenders won’t look at your application unless a bankruptcy has been discharged for at least 12 months and you’ve started to build up your credit again. The interest rates are going to be a little higher, and this is similar for an IVA.

The next level is county court judgements (CCJs) and defaults. CCJs typically happen when an account has defaulted – something hasn’t been paid and has moved into a CCJ. These are a little bit easier than bankruptcies and IVAs in terms of getting a mortgage, but it depends on the size of the CCJ or default and whether they have been satisfied.

The other thing to touch on is your deposit you have – or, for a remortgage, the equity in the property. The higher the Loan to Value, the harder it is going to be with bad credit lenders.

For example, if you’re putting in a 10% deposit and you’ve got a CCJ of £4,000 in the background, it’s more difficult than if you’re putting in a 40% deposit. But we can look at it. It just depends on the severity.

Can you remortgage with a debt management plan?

Yes, debt management plans are similar to defaults in the way lenders look at it. If you are currently in a debt management plan, make sure you’ve been keeping up to date with your payments.

At the end of the day, lenders want to see that you can pay back what you’re borrowing. With bad credit, lenders aren’t out there to scrutinise you completely. They want to help you get into a property and help you borrow money.

If your bad credit has been circumstantial – perhaps you lost your job, for example, they will understand this and want to help.

What deals and rates are available if you are remortgaging with bad credit?

It comes down to lots of factors. Deals and rates can vary, and it will depend on the size of the debt and the timing. More severe issues could mean higher interest rates, as we will potentially need to go to a more niche lender.

It also comes down to your equity. With a 10% deposit or equity, for example, a niche lender might give you an interest rate of 6% to 7% as we speak today in March 2025. But the severity and the Loan to Value will change the rates.

Are there many bad credit remortgage lenders?

At The Mortgage Store, we’re appointed representatives of Mortgage Intelligence – a network we access to get exclusive rates. We have around 70 lenders on our panel, and they do change, but as of today in March 2025, there are 20 to 25 specialist lenders that would look at people with adverse credit.

Is it better to improve my credit rating before remortgaging? How do I improve my credit score or rating before remortgaging?

It’s always better to try and improve your credit rating as it will improve how you’re seen by lenders. However, depending again on your score and the severity of your credit report, sometimes improving your credit rating could take you months or even years.

Do improve your credit rating as much as possible. But that might not be an option. With a remortgage, you’ve got a fixed deal that’s going to end – so time is not on your side. With purchasing, it’s different. But when remortgaging, perhaps you can’t improve your credit rating before your deal is due to end. In that case, there are solutions we can look at.

Our advice might be to look at a lender offering a one year deal with potentially a higher interest rate. We can use it as a stopgap while your credit improves – and then look at remortgaging again in a year’s time at a much better interest rate. I call it damage limitation.

How do I apply for a remortgage with bad credit?

It’s exactly the same as a normal remortgage process. As I mentioned earlier on, giving us all the information to work with is imperative. Without that, we can’t give you the best advice possible.

We would typically ask for a credit report, but if you’re upfront and honest about any bad credit or that your credit rating is bad, that’s a big help. Knowing this information allows us to dive in and see what we’re dealing with, to find the best possible lenders.

There are even high street lenders that could accept small blips on your credit report. If you’ve missed a couple of payments, it’s not the end of the world. You may see it as bad credit, but from a lender’s perspective, that’s not ‘adverse’ – it’s just situational.

Applying is exactly the same as when you purchase a property. The documentation is all the same, we’ll just need that plus your credit report, with an explanation as to how you’ve got into that situation.

What else would you like to share before we come back with episode two?

I don’t think I covered the question on how to improve your credit score, and a lot of people ask that question.

I have a couple of tips on that. If you’ve got a credit card, just put your bills and fuel on it, and then pay it off each month. Obviously, everybody’s different and credit limits vary, but utilising a credit card to show lenders that you can borrow money and pay it back will massively improve your credit score.

You’ll find on the likes of Experian, Equifax and TransUnion, that utilisation of a credit card has a very good impact on your score.

Also, keeping your spending below 50% on your credit card will also increase that rating. If you’ve got good discipline with your credit card and they offer you a limit increase, by all means, increase the limit. You need good control – because if you increase the limit and you’re still not using it much, it’s going to keep that credit card utilisation down.

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 with repayments on your mortgage.

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Bad Credit Remortgage (Part 2)

Sam Camozzi continues the conversation on remortgaging with bad credit. Episode two of two.

Can I remortgage without a credit check?

There are two types of credit check – a soft search and a hard search. You can’t remortgage without a credit check, essentially, but most lenders use a soft search to see if you pass their initial criteria. The hard search would be done on submitting a full application.

Can I remortgage with arrears?

Arrears could involve a number of things. It could be mortgage arrears, loan arrears or even from missing a payment on a credit card. In most cases it’s fine. Mortgage providers want to lend to you, and a couple of blips here and there aren’t usually a big issue – people do forget to make a payment at times.

You can still look at high street lenders, but If you have five or six different arrears, we would be looking at niche lenders. You can certainly remortgage with a few arrears in place.

What is a bad credit score?

There is such a thing as a bad credit score. If you’ve checked on Experian you’ll see a visual gauge that goes from ‘very poor’ to ‘poor,’‘fair,’ ‘good’ and ‘very good’. Something in the poor and very poor section will be considered bad credit.

TransUnion and Equifax give you a score out of 1000, and obviously the lower end of that score indicates bad credit.

But lenders won’t necessarily look at just the credit score. They also perform a credit search, where they look into your background for the last two years. So although your scoring might not be as high, your actual financial situation might be good.

Bad credit scores aren’t the end of your mortgage options. You can still look at remortgaging with still a bad credit score.

Can you release equity with bad credit?

Yes, providing there’s equity in the property and how much it is. The more niche lenders will cap the Loan to Value (LTV) to slightly less than the high street banks if you have bad credit.

High street banks would let you remortgage back up to 90% of the property value, with a good credit record. Let’s say you’ve got a £100,000 property with a £50,000 mortgage on it, and you want to borrow another £40,000 pounds. That would take you up to £90,000 – which is a 90% Loan to Value.

Niche lenders might cap it at 85% – so you could borrow £35,000, or 70% where you could borrow £30,000. The amount you can release will depend on the lender.

Can I remortgage if my partner has bad credit?

Yes, you can do that. There’s something called a financial association. If you’re both on the mortgage, we look at the person who has bad credit and the remortgage would be based on that.

If you’re the only one on the mortgage, and your partner’s got bad credit, it doesn’t really matter unless there is a financial association there, or you’ve got a bank account together.

You can still get a joint remortgage, it may again just put some limitations on the lenders.

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

If you’ve got credit card debts and you’re paying your bills each month, it’s going to have no financial impact. The credit report would reflect that you’re up to date. The only thing it’s really going to affect is your affordability.

If you’ve got a 999 credit score and £5,000 on the credit card, but your income is quite low, it is going to impact what you can borrow from the lenders. Just make sure you’re managing the credit card debt.

I wouldn’t see it as bad debt. There can be some stigma about credit cards, but it all comes down to discipline.

Can you consolidate credit card debt twice?

Yes, you can. Staying with the same lender to do it twice is very difficult, though, because you’re telling the lender you’re going to pay it off but they know you have done this before.

It’s revolving credit. Most people do use credit card debts. They pay it off and then sometimes they need to use those cards again, so you can pay it off twice.

As advisors, we are limited to doing this twice. If you have consolidated once you can come to us to clear off the credit cards for the second time. Doing it a third time would involve us assessing the situation in much more depth.

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

I don’t think it makes much difference. Personal loans tend to have higher monthly payments, which would impact borrowing a little bit more. It comes down to what the credit card level of debts are.

If you had a £10,000 credit card and took a loan out to clear that credit card off, the monthly payment may be more, and the £10,000 credit card may not affect your borrowing as much as the personal loan.

It’s an ambiguous question, really, because they both have an effect on the level of borrowing. With loans, you obviously pay them off and they’re finished. A credit card is revolving debt – you could clear the credit card off, but it’s still there and you can use it again.

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

I don’t think there’s a major difference. Lenders can be a little bit more relaxed on a Buy to Let, given that it’s a self-financing property.

They still take bad credit into consideration – they still look into it. In the Buy to Let market there are different lenders from residential. You could argue that fewer do Buy to Let, by a small margin.

But you can remortgage a Buy to Let with bad credit – and, as always, it depends on the credit issue. If it’s missed mortgage payments on that particular property, we’re going to have a challenge. If it’s a couple of missed payments, lenders are more lenient, because it’s self financing.

What else do we need to know about a bad credit remortgage?

We’ve covered most of it – and the running theme is that it comes down to personal circumstances. Don’t read too much into what you see online. The best thing to do is get in touch with a broker and present your situation to them.

Be completely transparent with us, and we can help you the best way possible. We’re working for you, not necessarily for the bank – we’re on your side to get you a mortgage as soon as possible.