In this brief blog, we are going to discuss how to remortgage with bad credit. If you have bad credit you may still be able to remortgage with the right help.

Remortgage with bad credit

You may be able to remortgage with bad credit with this will heavily depend on the type of bad credit and your current personal circumstances as well as your mortgage affordability.

When considering a remortgage with bad credit, the mortgage lender will want to ensure that the borrower will be able to continue making their monthly mortgage repayments on time. This means the mortgage affordability checks may be more rigorous. 

When looking to get a remortgage with bad credit you can also expect the mortgage lender to look into the amount of equity you have in your home, any additional mortgage deposit you may want to put down and your credit score.

If you are concerned that you will not be able to get a remortgage with bad credit then you should consider seeking the help of a bad credit mortgage broker who may be able to help you in securing a remortgage.

Bad credit could include:

A CCJ

An IVA

A debt management plan

A default

A bankruptcy

A home repossession

If you are unsure of what your credit score is or if you hae any bad credit markers on your credit report, then you should check your credit score from the four credit bureaus in the UK: Experian, Crediva, Equifax and Transunion.

Some of these credit bureaus may charge you a fee to view your credit report so what you can alternatively do is request a statutory credit report which is a free credit report which each credit bureau must provide to you upon you requesting it.

Alternatively, you can also use credit score services such as Checkmyfile and clearscore to check your credit report.

The main thing you should be aware of when getting a remortgage with bad credit is that the mortgage rates you will be offered will likely be much higher.

Remortgaging with a CCJ

If you are looking to remortgage with a CCJ then most mortgage lenders will insist that the CCJ has been satisfied. Some other mortgage lenders will insist that the CCJS do not surpass a particular value whilst other mortgage lenders will insist that the CCJ has been at least a few years old. This could be 3, 4 etc based on the mortgage lenders particular criteria.

There are very few mortgage lenders who may consider you for a remortgage with a CCJ if the CCJ has not been satisfied. If you are unaware of where to start then using a bad credit mortgage broker may help you understand your mortgage options.

Remortgaging with a home repossession

If you want to get a remortgage with a home repossession on your credit report, then you may find it very hard to find mortgage lenders who are willing to lend to you or lend to you are a good mortgage rate.

Mortgage lenders are wary of borrowers who have already been involved with home repossession and this will be reflected in the rigorous mortgage affordability checks the mortgage lenders will conduct.

Some mortgage lenders will insist that the home repossession occurred at least a certain amount of years ago.

Remortgaging with a mortgage default

As with a home repossession, the mortgage lender will be very hesitant to lend to a borrower who has had a mortgage default already and may conduct strict checks on the mortgage borrowers ability to continue repaying the mortgage after the remortgage has been completed. 

The mortgage lender may have a minimum amount of time since the mortgage default occurred which they will not lend to borrowers who fall within that timeframe e.g some mortgage lenders will not lend to borrowers who have had a mortgage default within 3 years.

Remortgaging with missed or late credit repayments

If you are remortgaging with missed or late credit repayment then it will depend on the circumstances in which you missed these payments and how many of the payments you missed. Each mortgage lender will have different lending criteria on missed or late credit repayments.

Can I remortgage with bad credit if I am self-employed?

If you are self-employed then getting a remortgage with bad credit may be much harder as most mortgage lenders will place greater scrutiny on the income of self-employed borrowers. The mortgage lender will look to verify the reliability of your income and work out what your average income is each month.

If you can prove to the mortgage lender that you are able to continue making your monthly mortgage payments after your remortgage then you may find that the mortgage lender is more willing to lend to you.

Most self-employed mortgage lenders will insist on self-employed borrowers having a minimum of 3 years worth of self-employed accounts but there are mortgage lenders who will offer a remortgage with bad credit to borrowers with a minimum of 12 years worth of self-employed accounts.

The documents you may need for a self -employed remortgage with bad credit include:

Your P60 tax return

Your SA302 tax calculation form

Your company accounts if you work through a limited company

You may find using the services of a mortgage broker who has experience dealing with self-employed borrowers.

Other considerations a mortgage lender may take into account when offering a bad credit remortgage to a self-employed borrower are:

The Trading style: are you drawing a salary from a company or do you have a claim over a share of retained profits. These could make a significant difference on how much you may be able to borrow.

Your experience: how long have you been self-employed and what is your working history.

FAQs about getting a Remortgage with bad credit

Below is a list of the most frequently asked questions about getting a remortgage with bad credit.

Can I remortgage with CCJ?

Yes, you can get a mortgage with a CCJ as there are a lot of mortgage lenders who offer mortgages with CCJS but this will depend on your personal circumstances.

Some mortgage lenders will accept a borrower with a CCJ but will have certain criteria such as how long you have had the CCJ, if the CCJ was satisfied and the total amount of the CCJ.

How do I clear a satisfied CCJ?

To clear a satisfied CCJ you will need to contact the county court which registered the CCJ on your file with proof that the CCJ was satisfied. If the CCJ was satisfied within 14 days of it being registered on your credit file then it will be removed.

If the CCJ is satisfied after the first 14 days then it will be marked as satisfied but won’t be cleared from your credit report.

Can I remortgage with debt?

Yes, you can get a remortgage with debt but most mortgage lenders will look at how much debt you have and the type of debt you have If you have secured debts on your credit profile.

You can also remortgage with debts by consolidating your debts into your remortgage. Consolidating your debts into your mortgage is something you should do with some caution.

What will happen if I don’t pay a CCJ?

If you don’t pay a CCJ then the CCJ will be marked as unsatisfied on your credit report and will stay there for at least 6 years.

This will mean that your ability to get credit in the future may be limited. If you fail to repay what is owed then the entity you owe money may seek court enforcement and send bailiffs to repossess your property.

Should I remortgage to pay off debts?

You don’t have to remortgage to pay off debts. Paying off your debts with a mortgage means stretching your debts over a much longer repayment term than they may have been on.

This means you will have to pay much higher interest rate costs as you will be charged interest over a much longer period.

Use a remortgage calculator

To see if you are able to get a remortgage with bad credit you may be able to use a remortgage calculator which shows you what mortgage rates you may be able to get based on your credit score.

There are various remortgage calculators which are available but you should be aware that these remortgage calculators are only indications of what remortgage you may be able to get with bad credit but they do not guarantee you will get a remortgage with bad credit.  

Using a mortgage broker to get a remortgage with bad credit

You may want to consider using an independent mortgage broker to get a remortgage with bad credit.

Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases. This could be over 11,000 mortgage products. This may have some advantages than going directly to a mortgage lender.

A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you.

After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.

This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your remortgage is indeed a possibility before you make a full mortgage application. Once you have found a home you want to buy or are satisfied with the mortgage offer for your remortgage then the mortgage broker will then look to get you a mortgage offer.

This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month if there are any limits such as early repayment fees, or annual overpayment limits.

If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.

Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it, they will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.

In this brief guide we discussed how to get a remortgage with bad credit. If you have any questions or comments please let us know below.

John Bate

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.