Remortgaging with Bad Credit

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Home » Mortgages » Remortgaging with Bad Credit

Remortgaging with Bad Credit

If you own a property and want to remortgage with bad credit registered against you, we have specialist lenders that can help. Read on for more information.

Can I remortgage with bad credit?

Having bad credit could result in high street lenders rejecting your application, however the good news is that we have specialist lenders available who are happy to help clients with poor credit profiles.

There can be many reasons why clients wish to remortgage and the advisers at, The Money Hub, are here to help find you a solution. Common reasons to remortgage are:

  • Switch to a better rate – Maybe your current deal is due to expire, so you want to know what options you have available with other lenders.
  • Raise Money for Home Improvements – such as loft conversion, extension, Kitchen, Bathroom etc.
  • Consolidate Debt – May be your outgoings are too high and you are looking to see what debt consolidation options you have available.

Where can I remortgage with Bad Credit?

Lenders that accept applications from clients who are looking to remortgage with bad credit generally offer their products through mortgage brokers. At the time of writing this 30/10/2020 these lenders are able to help clients remortgage with poor credit:

  • Aldermore Bank
  • Bluestone Mortgages
  • Kensington Mortgages
  • Masthaven Bank
  • Norton Home Loans
  • Pepper Money
  • Precise Mortgages
  • Together Money
  • Vida Home Loans

Each lender has their own unique criteria and you may qualify for some and not others. It is important to speak to a bad credit remortgage adviser to find out what your options are.

What is bad credit?

There are different types of bad credit, such as:

  • Missed Payments – This is where you have been unable to keep to the terms of a credit agreement and unfortunately you have then missed a scheduled payment.
  • Default – This will typically happen when you are 3-6 months in arrears and therefore the lender issues a default notice against you. This will show on your credit report that you defaulted for X amount of money on X date.
  • County Court Judgement (CCJ) – This can follow once you have ‘defaulted’ on a debt. This is where someone has taken you to court in order to reclaim the money owed. If you get a judgement against you this will be confirmed in the post and state, how much you owe, how to pay, deadline for paying and who to pay.
  • Debt Management Plans (DMP) – This is in an informal agreement to pay your creditors £X per month. You can arrange this direct with the lenders yourself or you could use a 3rd party. If you are in a DMP through a 3rd party you would pay £X per month to them and then they would split this with the creditors, depending upon the amount each creditor agrees to accept based upon each individual debt level.
  • Individual Voluntary Arrangement (IVA) – This is a formal agreement between you and your creditors to pay back £X amount per month over X amount of years. This has to be set up by an Insolvency Practitioner.
  • Bankruptcy – This is where you were unable to pay your debts over a period of time and therefore you are declared bankrupt resulting in the creditors writing off the debt.

Why do I have a low credit score?

You may have a low credit score if you have any of the above bad credit registered against you plus your credit score is also determined by:

  • Debt Level – If you have a substantial amount of debt and you are at/near the limit this indicates that you rely on the debt to maintain your lifestyle.
  • Voters Roll – If you are on the voters roll this helps confirm your name and address history, so if you are not on the voters roll it hard to confirm your identity.
  • No Active Credit – If you don’t have any active credit this has an impact as there is no record of your ability to manage credit well.
  • Credit Searches – If you have excessive credit searches this indicates that you may be trying to borrow money from multiple sources.

When remortgaging what do lenders look at regarding the bad credit?

When accessing if an applicant meets the lenders criteria they will pay close attention to:

  • Date – When was the bad credit registered? The more recent the bigger impact it will have on your options.
  • Type of Debt – The type of debt that was not paid has an impact. For example, if you failed to pay a mortgage this would have a more serious impact when compared to a missed payment on a mobile phone contract.
  • Amount – If you missed a payment on a large commitment that you have this will carry more weight when compared to a small commitment.
  • Satisfied – If you have managed to resolve the debt issue and it is now satisfied this will be looked upon more favourability by lenders.

How long does bad credit last on my credit profile?

Your credit report shows your payment history for the last for six years and after this date it will drop off the report.

What documents would a remortgage lender want?

The lender will ask for many documents from you for your application and these include:

  • Proof of Identity – Such as a Passport of Driving License. These will have to be valid and at your current address.
  • Proof of Income – Such as last 3 months payments & P60 or if you are Self Employed this would be your Tax Overviews and Tax Calculations or your Accounts.
  • Bank Statements – We will require your last 3 months bank statements to confirm your outgoings.
  • Lender Documents – these are specific to the lender – typically this will be a lender declaration and a Direct Debit Mandate.

Lenders always have the right to request additional information to complete their due diligence on the mortgage.

How to get a remortgage with bad credit arranged?

The Mortgage advisers at The Money Hub have lots of 5 Star Reviews and we would be happy to help. You can either call us or complete the above enquiry form and schedule a call. It is always important to have a copy of your credit report available. You can obtain this from CheckMyFile, Equifax or Experian.

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Remortgaging with Bad Credit FAQ’s

Yes – There are lenders available who offer their mortgages through specialist brokers that are willing to help clients that have had Missed Payments, Defaults &/or County Court Judgements.

Yes – Before speaking to a lender or broker you should always get a copy of your credit report and make sure it looks correct. One of the first documents your mortgage broker will ask for is your credit report, so having it ready will help. When your broker submits an ‘Agreement In Principle’ this will involve a credit check carried out by the selected lender.

You can release equity through a remortgage or a secured loan (also known as a 2nd Mortgage). You should speak to a mortgage adviser who can review both these options and give you advice on which route to go down.

Related Information

Bad Credit Mortgages

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