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Remortgage with bad credit

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Feb 8, 2023

Can you remortgage with Bad Credit?

Remortgaging is a great way to pay off your mortgage with the accrued equity, get a better mortgage rate, or lower your monthly repayments. You can also remortgage as an option to pay for home renovations. But is it possible to remortgage If you have a bad credit score?

It is possible to remortgage with bad credit, however, it might be challenging to find a lender as only a few offer bad credit mortgages and remortgages. The eligibility criteria are stringent for an adverse credit file and depend on your type of credit issues.

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What Is Considered Bad Credit for Remortgaging?

Bad credit for remortgaging refers to adverse credit issues such as a low credit score, late payments, missed payments, defaults, repossessions, bankruptcy, CCJs, a debt management plan, etc. These issues negatively affect your credit history and may deter some lenders from offering your credit.

What Is Considered Bad Credit for Remortgaging?

There is no specific credit score stipulated as bad for remortgaging. However, if your credit score falls in the poor or very poor credit rating categories, lenders consider you high risk. Each of the three credit bureaus provides specific ranges for a poor and a very poor credit score.

For Experian, a credit score below between 561 and 720 is poor, while 0 to 560 is very poor. Equifax categorises credit scores below 580 as poor, while, for Transunion, credit scores from 601 to 657 are poor, and 300 to 600 are very poor.

Which Type of Lenders Offer Remortgages with Bad Credit?

Most high street banks and lenders do not offer mortgages to borrowers with bad credit. However, niche lenders are more flexible and may consider your application despite your bad credit score. They are willing to look at borrowers’ situations on a case-by-case basis and may be more lenient with some credit problems. For example, the lender may consider your application if your arrears were more than a year ago. Specialist lenders also consider if your financial situation has improved in the past, leading to a lower income-to-debt ratio. They also consider how much you have for the deposit.

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How to Remortgage with Bad Credit

Applying for a remortgage with bad credit varies from case to case. However, below are the general steps to follow.

1. Review Your Credit Report 

Remortgage lenders will review your credit report to establish your credit status. You must clearly understand where you stand to enable you to better apply and negotiate for a remortgage with bad credit.

Download your credit file from the three credit bureaus. Check your overall credit score and compare it with the categories provided by each bureau. Then review each section to identify your core issues and determine ways to explain your case to the lenders. Also, check the report for errors and inaccuracies and contact the respective mortgage lender and bureau to report and have them corrected. You may also be surprised that your credit status is not as bad as you think. For instance, if you have a fair credit score, you have a better chance of qualifying for a remortgage.

2. Consider Your Options 

You must be strategic about how you apply for a remortgage with bad credit. Although applying to as many lenders as possible can be tempting, doing so can hurt your credit report. The lenders will conduct hard inquiries into your credit history. Such inquiries leave a footprint on your credit history and may be perceived by potential lenders as you are in a financial crisis, and it might be challenging to keep up with repayments.

Avoid applying to high street lenders as there is a minimal chance you will qualify for a remortgage with them. Instead, identify specialist bad credit mortgage lenders. Research them to understand their eligibility criteria. Narrow down to those whose eligibility criteria you would meet.

3. Calculate Your Loan to Value (LVT)

LVT is the size of the standard mortgage in relation to the property’s value. It is calculated as a percentage, and calculating it is quite simple. Divide your home’s current value by the amount you owe on the mortgage, then multiply by 100.

You can determine the value of your home using an online valuation tool. You will be required to enter your home address and provide details about your home, such as the number of rooms, square footage, amenities, year of construction, if you have done significant renovations, etc. The automated valuation tool will compare your house against similar properties in your area and public data such as tax records and recent sales to estimate the fair market value. Alternatively, you can hire an appraiser or a real estate agent to value your house.


Your LVT determines how much you can get in refinancing, the required deposit, interest rate, and remortgage terms. The less you owe on the original mortgage deal, the higher your equity on the property, and the more you can borrow. You may also be able to negotiate for better interest rates and a lower deposit despite your bad credit. However, an extraordinarily high or low LVT is considered risky.

The typical LVT for remortgaging is 50 to 90%; 60% to 75% gives you the best interest rate. Although LVT higher than 80% may seem good, it results in more expensive borrowing costs. For such high LVT, you will need to take up private mortgage loans, or the lender may deny you a remortgage deal. A 90% LVT is unacceptable by most lenders.

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4. Establish Your Affordability 

Aside from checking your credit record, potential lenders will also conduct an affordability test to determine if you can afford to pay back the mortgage. Your affordability is mainly dependent on your income and income-to-debt ratio. It limits your affordability if you have other loans or recurring expenditures taking up the bulk of your income. Your maximum mortgage amount should be four to five times your income. However, bad credit remortgage lenders will check to see how much you pay for other loans and the remaining balance.

Before applying for a remortgage with bad credit, think about the following:

• How much you would like for the remortgage

• Duration of the new mortgage

• How much you can afford in monthly repayments

• How much you can afford for the deposit

• How much you will incur in application fees

5. Determine the Type of Remortgage You Want 

There are different types of remortgage agreements or plans. For example, in a cashout remortgage, you leverage your equity in the property to borrow more than the remaining mortgage balance and then pocket the difference. You can use the extra cash in whichever way you like, including home improvement, debt consolidation, as capital for business, or home improvements. With the standard remortgage, you simply transfer your existing mortgage to a new lender for better interest rates and lower repayments.

6. Apply with the Most Suitable Lenders 

Once you have done your due diligence to establish your affordability and lenders whose criteria you meet, proceed to prepare your paperwork and apply. If filling out a mortgage application with different lenders, it is best to do so around the same time to take advantage of the 45-day hard inquiry window. Hard inquiries during this period show up as a single entry in your credit report. On the contrary, if the enquiries are made several weeks of each other, they show up individually and can lower your credit score.

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What Are the Alternatives if You Can’t Get a Remortgage With Bad Credit?

There are several options if you are denied a remortgage with bad credit:

  1. Keep paying your current mortgage diligently. Pay the mortgage on time; if possible, you can increase your repayment to lower your debt more rapidly. It will boost your credit rating and improve your chances of getting a remortgage the next time you apply.
  2. Consult with a bad credit mortgage broker. They will assess your situation and recommend specialist lenders likely to offer your refinancing. Therefore, you can reapply with different bad credit remortgage lenders to who you are more likely to qualify. They will also help you to shop around for the best mortgage deals.
  3. Wait for one to six years. Most credit issues disappear from your credit report after six years. Even if the six years have not lapsed, the longer it has been since the issue was registered in your report, the better your chances of qualifying for a remortgage.
  4. Take Measures to Improve Your Credit Rating. There are several ways to improve your credit rating. For instance, pay off your credit card debt or consolidate multiple credit card debts, pay your bills on time, check your credit report for errors, pay your revolving credit, avoid new credit unless it is credit-building, etc.
  5. Find a guarantor. Some lenders may be willing to reconsider your application for a remortgage with bad credit if you have. Your option includes a joint sole proprietor mortgage and a guarantor mortgage.
  6. Product Transfer. Your current lender allows you to change to a different mortgage product within their catalogue, enabling you to lock in a new fixed rate or a more flexible payment. Most lenders do not conduct credit checks or additional affordability tests for a product transfer.
  7. Second charge mortgage. It is a secured loan or a second mortgage against your equity in the house. Therefore, the existing mortgage is left intact, and you continue to pay for it per your agreement with the lender. But, you open a new credit account with the same or a different lender.

Work with a Bad Credit Remortgage Broker

One of the best ways to find a remortgage lender if you have a bad credit rating is to work with a specialist bad credit mortgage broker. They come in handy in different ways. First, they review your credit report to assess the extent of your credit issues. If need be, they offer expert advice on improving your credit score.

They also assess your current mortgage terms, repayments, and balance. They calculate your loan to value to establish how much you can borrow against the accrued equity. Depending on their findings, they recommend the most suitable bad credit providers.

Specialist bad credit brokers have networks with various specialist mortgage lenders. They also understand their eligibility criteria and can match you with the most suitable ones. They can also help you with the application and negotiation process to increase your chances of securing remortgage credit.

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Can you get a remortgage with mortgage arrears?

Missed mortgage payments and arrears are a big red flag for lenders that you won’t be able to make your payments on time. Therefore, most lenders will be adamant about offering you a remortgage. However, if you have a good reason for the areas, a mortgage broker can help to negotiate with potential lenders. It is harder to get a remortgage if the arrears are recent and still pending. If the arrears were several years ago, you might be charged high interest and required to make a 15 to 25% deposit.

Can you get a remortgage with a CCJ? 

It depends on when the CCJ was registered. The more recent it is, the harder it will be to get a lender. However, a few specialist lenders may be willing to consider your application if it has been a couple of years since the CCJs. Deposit requirements are much higher for CCJs. The typical deposit requirement is at least 25% of the property’s purchase value.

Can you get a remortgage with a bankruptcy history? 

Bankruptcy is one of the most credit issues. A high street lender will automatically reject your application no matter how long it has been since you filed for bankruptcy. However, mortgage specialists may consider your remortgage application if at least six years have lapsed since filing for bankruptcy.

Can you get a remortgage with a property repossession? 

Repossession is as serious as bankruptcy, and most lenders will reject your application. However, the longer it has been since the repossession, the better your chances of getting a remortgage.

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