Remortgage with bad credit

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Remortgage with bad credit

On this episode of the Remortgage Podcast, Craig Skelton from Renew My Mortgage is back to answer some of your remortgaging questions – this time on bad credit.

Can you remortgage with bad credit?

The good news is that you can remortgage with bad credit. It does depend on personal circumstances and what you deem as bad credit. We’ll get onto the different types of bad credit later but, generally speaking, it is possible to remortgage.

How can I remortgage with bad credit?

It follows the same process as any remortgage. With Renew My Mortgage you will submit brief details on our initial enquiry form. That’s picked up by a mortgage broker who will send you through a link to a secure portal where they will interact with you. They will explain what’s involved and what documents you will need.

Can you be declined a remortgage?

You can be declined a remortgage even without bad credit. Whether you are accepted generally depends on meeting the lender’s affordability criteria.

We work with a lot of lenders – both high street providers and bespoke ones that are often more understanding about different client scenarios. So, yes, you can be declined but Renew My Mortgage will go through every possible scenario to help you get a remortgage. We will advise you if it’s unlikely you will be accepted.

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

Looking at bankruptcy first of all, it does depend on how long you’ve been discharged. There are some bespoke lenders that will accept you if you’re two or three years discharged, while some of the high street ones wait longer. But, again, it is down to personal circumstances.

We always ask clients to look at Checkmyfile with a remortgage, particularly around bad credit, because it enables us to see exactly what the lenders see.

In terms of a County Court Judgement (CCJ), again that’s down to personal circumstances. You can remortgage with CCJs depending on the type and size of the debt and when it was registered. Your  mortgage broker will help you in exploring that. Lenders do look at the overall financial picture – not just the CCJ.

Individual Voluntary Agreements (IVAs) are a little bit different. The good thing is that you have a good agreement to pay your creditors off, and you’re making payments which will help rebuild your credit score. An IVA typically lasts for five years and again, your broker will look at the specific details to get you a remortgage. It’s possible, depending on the size and type of debt outstanding.

Can you re-mortgage with a debt management plan?

This can be a little bit more difficult. There are lenders that will look at debt management plans, but they are limited in numbers which gives you less choice. Again it’s just looking at the overall picture and exploring the options.

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

As soon as you move away from the high street main lenders, you can expect to be paying a little bit more. You’ve got to think of it from a lender’s point of view – because your credit issues make it riskier to lend to you.

A lot of the time bad credit is not down to choice, and there are always individual circumstances. Although you do tend to pay a little bit more in terms of the rate – you are still able to remortgage, which will usually save you money in the end.

Once we’ve found you a good deal, aim to get everything paid on time. Remember that paying a mortgage is actually helping your credit score. So every single month you’re paying your mortgage, your credit score is increasing as well. That way in two or three years’ time we can hopefully remortgage you onto a mainstream, better value deal.

Are there many bad credit remortgage lenders out there?

The good news is there are bespoke lenders that will look at individual circumstances to offer you a mortgage. Providers tend to be bespoke ones and finding them is the job of the mortgage broker from the moment you complete your detailed enquiry form.

We’ve got your financial details and credit score, we’ve got your documents so we can explore the marketplace to find you the best deal based on your criteria. It might sometimes be that you only have a choice of two or three lenders – or even just one – but you can still get a remortgage that suits you.

How do I improve my credit score before remortgaging?

The big thing is just making sure that you are paying everything on time. Make sure you’ve got your direct debits set up – especially with a credit card, to make sure you meet the minimum payment. Then you can be sure your credit rating is improving because you’re paying your debts on time.

One thing that does have a negative impact is if you’re maxing out your credit card each month. If you have a £5,000 limit and your balance is always over £4,000 that will reduce your credit score, because your debt ratio is high compared to your credit allowance. Try to keep the debt below 50% of your limit.

Make sure you don’t have lots of searches in the months running up to remortgaging – even things like a new mobile phone contract or a store card can leave hard footprints on your credit file.

How do I apply for a remortgage with bad credit?

It’s exactly the same process as any remortgage. You fill in your online enquiry form. You get your dedicated mortgage broker. They’ll be in contact with you asking you to upload documents and use Checkmyfile.

We’ll explore your personal circumstances so that we can give you the best advice. It might take a little bit longer because we’re talking to different lenders, comparing rates and fees and getting you the best deal we possibly can.

Get in touch around six months before your mortgage is due – that’s plenty of time to get things in place ready for when your deal ends.

What other advice can you offer someone with bad credit looking to remortgage?

If you’re in a difficult credit situation, a mortgage broker’s advice can really help you. In some cases, such as when a debt problem is very severe or very recent, we might not be able to get you a mortgage straight away. Your broker will be frank and honest about your options.

Even if a mortgage is out of the question today, a broker will help you put a plan in place to help you get a remortgage perhaps in three or six months’ time.

Remember that mortgage brokers have seen every different situation and circumstance. They’re not there to judge you. They just want to know the details of your circumstances so that they can offer you the best advice. We’re here to help you find the best solutions for your situation.