Bad Credit Remortgages
Homeowners can release capital by remortgaging their property for expenses like cars, holidays, or home improvements. You can often also obtain a better deal at the same time, making it a win-win situation.
It’s possible to remortgage with bad credit, find out more below.
REMORTGAGE WITH POOR CREDIT
Having financial problems since your first mortgage may make it difficult to remortgage with your current lender. Having a poor credit score may pose a challenge, but it doesn’t automatically disqualify you from remortgaging your home. High street lenders may see bad credit applicants as high risk, but there are still options available. People mistakenly believe that bad credit always prevents successful remortgage applications.
In truth, most homeowners will be able to obtain a remortgage deal even with several credit issues on their record, such as:
- Missed Payments
- Late Payments
- Debt Management Plan
- Defaults (a series of missed payments)
- County Court Judgments (CCJs)
- Individual Voluntary Arrangement (IVA)
Every case is unique, so there’s no guarantee of remortgaging with bad credit. Adverse events affect your credit score but shouldn’t prevent you getting a remortgage deal.
REMORTGAGE INTEREST RATES IF I HAVE BAD CREDIT
Having bad credit can result in higher interest rates on remortgages, especially if the bad credit events are recent. With time and effort to repair credit, rates can improve. Non-mainstream lenders may offer better options. Contact a specialist mortgage broker to find the best remortgage deals for your circumstances.
DOES BAD CREDIT AFFECT REMORTGAGING?
People remortgage for various reasons, such as getting a new mortgage rate or raising funds. Even with bad credit history, there are lenders who will consider applications. Speak to an adviser to explore your options.
WHAT IS A CREDIT SCORE?
The process of determining credit scores involves three main credit reference agencies in the UK. Equifax, Experian and TransUnion gather information from lending companies and public records.
This information helps lenders determine whether to approve a remortgage application. People with bad credit may have to pay more fees and interest. Borrowers with a good credit history have more options available to them.
BAD CREDIT REMORTGAGE LENDERS
Having bad credit can make it hard to remortgage with traditional lenders. However, specialist lenders may offer more flexibility and competitive rates. Improving your credit score and seeking out specialist lenders can increase your chances of securing a remortgage.
HOW DO I IMPROVE MY CREDIT SCORE BEFORE I REMORTGAGE?
Adverse credit events stay on your record for six years, impacting your credit score and lender decisions. Declaring certain events remains important, even after their removal from your record. Improving your credit score is essential for future financial dealings.
Dedication to lowering your score brings small, yet noticeable, improvements over time. Taking positive steps and seeking advice from a qualified adviser can help improve your credit score. These include:
- Get your credit report from all three UK credit agencies – Experian, Equifax, and TransUnion. Make sure the information is accurate, since each agency may have different details. Make sure you review all three reports, not just one.
- Regularly update personal details held on your credit report.
- Register for the electoral roll.
- Monitor your credit card balances and aim to pay more than the minimum each month to reduce the balance. Be careful not to exceed your credit limit.
- Use your calendar to make sure you pay bills on time and manage your monthly income.
- To have good credit, use your credit card occasionally for small purchases like gas or groceries. Pay off the full balance each month to avoid extra debt. Don’t cancel unused cards, as they can help build a positive credit history.
- Avoid payday loans, as they signal financial struggles with managing monthly expenses.
- Moving forward, leave any good debt on your report.
CAN I AFFORD TO REMORTGAGE?
All mortgage applications undergo an affordability assessment, considering income and expenditure to determine a debt-to-income ratio. The recommended ratio for approval is 45%.
To do a rough calculation to see where you stand:
- Make a list of all income you will receive over the year and divide by 12. If all your income comes in monthly, just add it up.
- Add together all your monthly bills, like mortgage and credit card payments. Also, list any other bills, whether they’re due quarterly, annually, or at other times. Include these costs in your total.
- To calculate your debt-to-income ratio, divide your monthly expenses by your monthly income. After that, multiply the result by 100 to get the percentage.
A smaller number is preferable. You can lower your debt-to-income ratio by either reducing your debt or increasing your income.
Contact us today for free, no-obligation advice from our team of experienced brokers who specialise in bad credit.
REMORTGAGE BROKERS SPECIALISING IN BAD CREDIT
IMC Mortgage Brokers specialise in helping property owners with bad credit find remortgage deals. We work with a network of bad credit lenders to secure competitive rates.
We can help you find the right mortgage, no matter what your credit history, with our experience and market access. Contact us today for personalised help.
Types of Bad Credit Remortgaging
Getting a remortgage with defaults on your credit record can be challenging. You may need a specialist lender. Your remortgage terms depend on factors like the default amount and settlement. Defaults stay on record for six years.
Lenders see defaults as poor money management, making you a high lending risk. Individual circumstances vary, so seek advice to improve your chances of getting a remortgage. It could make a significant difference in your financial situation.
Having a CCJ on your credit record can make it difficult to get a credit card, open a bank account, or obtain a mortgage. Nonetheless, obtaining a remortgage is still achievable, even if you have a CCJ. When reviewing applications, lenders consider factors like the registration, the outstanding amount owed, and the age of the CCJ.
To increase your chances of getting a good deal, pay off any CCJs and keep a clean credit history. After six years, the CCJ will drop off your credit file. Contact our team for advice on getting a mortgage with a CCJ.
Individuals with a discharged bankruptcy can apply for a remortgage, but mainstream lenders may be cautious. Specialist lenders cater to those with poor credit history, with time since discharge being a key factor. Your financial options expand after three years, with bankruptcy disappearing from your credit files after six.
Some lenders may offer mortgages at once after discharge, with a larger deposit or higher interest rate. Individual circumstances and financial conduct play a significant role in eligibility.
Despite being in a Debt Management Plan (DMP), it’s possible to get a remortgage with the right lender. A DMP is a non-formal arrangement to repay non-priority debts through agreed instalments to a practitioner.
A DMP differs from an Individual Voluntary Arrangement (IVA) because debts stay active, and interest continues to accrue. Clearing debts could be a lengthy process that takes time.
A remortgage can be a useful way to pay off existing debts and improve credit rating. Mainstream lenders may not lend to those with bad credit, but niche-market lenders specialise in working with them. These lenders consider the borrower’s current financial situation and conduct since the Debt Management Plan.
Obtaining a remortgage after completing an Individual Voluntary Arrangement (IVA) can be challenging because of strict lending criteria. However, there are specialist lenders for individuals with previous financial difficulties.
An IVA stops debts and fees from increasing. If you make regular payments for 5 years, the lender will forgive the remaining debt. Credit reporting agencies will keep the IVA on your record for six years before removing it.
Affordability is key when trying to get a remortgage after an IVA. Showing you can now make repayments on a new mortgage is important. Having a good level of deposit, such as equity in your property, will help. To find affordable remortgage options, consult a specialist mortgage broker for expert advice.
