Can I remortgage with bad credit?
Yes, you can remortgage with bad credit, but your options may be somewhat limited.
While having bad credit doesn’t always mean you’ll be turned down, it could make borrowing more expensive. This is due to the perceived risk to the lender.
Having said that, you could still save money by remortgaging - if you can find a better deal than your existing one.
What remortgage options are available with bad credit?
If you’ve got bad credit, there may be more options available to you than you thought.
Each lender follows its own set of eligibility criteria and some are more lenient than others.
There are lenders that specialise in providing mortgages to those with less-than-perfect credit histories. At Ocean, we can help you find a suitable deal that you’re eligible for.
There are three common reasons why people remortgage:
- Replace their current deal when it ends
- Switch to a better deal mid-way through
- Borrow more money and pay it off as part of their mortgage
You could stick with your current provider or move to a different one if you prefer.
If you remortgage to borrow more money, you could put it towards anything you like (but not gambling or anything illegal). You could pay off debts or make home improvements, for example.
Remember that if you extend your mortgage over a longer period, then you may end up paying more interest in the long run.
Also bear in mind that switching deals mid-way through your mortgage may incur early repayment charges. So you’d need to weigh up how much you’d save and compare it to any fees.
Can I remortgage with a CCJ?
Yes, you may be able to remortgage with a CCJ, but your options will be reduced. This is due to the risk involved from the lender’s point of view.
However, some lenders specialise in lending to those with bad credit, including CCJs. Plus, the more time that has passed since the CCJ was issued, the more likely you’ll find a lender that’ll approve your application.
If the CCJ was only for a small amount and has already been paid off, this should also work in your favour. Especially if you’re recent credit history is in good shape.
What other factors do secured lenders consider?
Your credit score is only one of the factors that lenders take into account. Other common factors include (but are not limited to):
Lenders want to know that you can comfortably afford to pay them back each month - on top of your other outgoings.
Borrowing will be secured against your house, so it’s important you can afford the monthly repayments. Otherwise, you could put your home at risk. (Though repossession usually only happens in the worst-case scenario).
2. Loan-to-value (LTV)
Your loan-to-value is the ratio between your outstanding mortgage balance and your current house value.
For example, if you owe £125,000 and your house is worth £250,000, then your loan-to-value is 50% (because your loan is half of your property’s value).
The lower your mortgage balance, and the higher your property’s value, the less risky you’ll appear to lenders. You may find it easier to get competitive interest rates as a result.
What steps can you take to improve your approval chances?
To improve your chances of getting the best remortgage deal you can:
- Set up direct debits to maintain all your payments on time, every time
- Reduce your debts and non-essential outgoings if there’s room in your budget
- Check your credit report before you apply and fix any mistakes as soon as you can
- Cut old financial ties that could be damaging your reputation
- Register to vote to help lenders confirm your identity and address
- Space out credit applications as each one appears on your credit report
- Use eligibility checkers to find out if you’re likely to be accepted before you apply, without affecting your credit score
For advice, we suggest you speak to a broker, like Ocean, who can help you find a deal to suit you.
Mortgages are secured against your property. This means your home may be at risk if you fall behind with your mortgage repayments.
Note, the more you borrow and the longer your mortgage term, the more interest you'll pay in total.