Remortgage with Poor Credit – The Facts

Are you thinking about remortgaging? Are you unsure what that term means? Are you worried your credit score may let you down or even prevent you from remortgaging altogether?

We’re here to help. In this article, you’re going to learn:

  • What remortgaging is
  • Why you might do it
  • What we mean by a credit score
  • How to remortgage with low credit score

What does it mean by remortgaging?

The basic idea of remortgaging is to leave your current mortgage deal and swap to another one. A remortgage means switching to a different lender for the whole mortgage, including any extra you’re taking out.

In the case of a possible remortgage bad credit scenario, it is vital to understand that it may still be possible to get a remortgage. A poor credit score may include one or more of the following events:

  • Missed payments (on the mortgage or other loans including credit cards)
  • Defaults
  • CCJs (county court judgments)

The more negative events you have on your credit record, the lower your credit score is likely to be. You can repair it, but this can take time.

Even if a remortgage isn’t possible, there are other possible solutions Clever Mortgages can help with. We’ll come to those later in this article.

What reasons can I remortgage for?

There are many reasons why homeowners consider remortgaging their property. Some people may wish to remortgage to take advantage of equity in their property. This means the property must be worth more than the amount on the mortgage. Statistics show that in December 2019, 16,820 remortgages were taken out with extra borrowing involved.

Here are some of the main reasons you may do this. Incidentally, you may remortgage for more than one reason, for example to consolidate debt and release a little more on top for another purpose.

Debt consolidation

The interest rate on a personal loan, car loan, credit or store card can be higher than that paid on a mortgage. If you’re paying a lot of money each month to meet these kinds of repayments, consolidating them into your mortgage could reduce your monthly expenditure.

However, it is always important to balance any potential monthly savings with the cost of adding the debts over the term of the mortgage. Be aware that any unsecured debts consolidated will become secured on the property.

A mortgage broker can talk you through this and assess the best option for you.

Home improvements

This could mean a new extension, whether over one or two floors. You may want to add a separate garden building to create a working from home space (something that could become more popular post pandemic). You may simply wish to convert part of your existing property to improve it or use it for another reason. For instance, you may convert a cold conservatory into a working from home space by adding underfloor heating and new furniture.

To free up cash for a family member’s house deposit

If you’re a parent wanting to help a child with a deposit for their own home, you may remortgage to access some of the equity in your own home.

To take advantage of a lower interest rate

The Bank of England base rate is currently lower than at any other point in history. We cannot assume it will stay that way forever, but if your current mortgage was taken out when interest rates were higher, you may find better deals on the market now.

To begin to rebuild a credit file

If you’ve had too much debt in the past and you’ve struggled to repay it, you may have gone onto a debt management plan. If so, you may wish to remortgage to consolidate this. in doing so, you could start to rebuild and improve your credit file.

To save money on monthly repayments

Not all reasons for remortgaging involve additional borrowing. In some cases, it’s all about getting a better rate on the current mortgage with a lower monthly repayment. If you’re on a standard variable rate and paying too much each month, a new deal could see you switch to cheaper monthly repayments. Over the lifetime of the loan, this could lead to a far lower amount of interest paid on the mortgage.

Watch our video on the remortgage application process

What is a UK credit score?

A credit score is a three-digit number applied to an individual. It tells lenders whether an individual is a high or low risk candidate for any kind of loan. It is slightly different from a credit rating, which indicates where you sit within various bands used by a lender. These bands or scales aren’t the same at all lenders, hence why there are situations where people may be rejected by one lender and accepted by another.

What is a good credit score?

Different credit rating agencies in the UK work on different numerical systems. For example, Experian goes up to 999, and anything between 881-960 is deemed good. At Equifax, the score goes up to 700. A good score with them is between 420-465.

What is a bad credit score UK?

A fair credit score with Experian starts at 721, so if yours is lower this will dip into poor or very poor territory, depending on how low it goes.

Equifax’s fair territory begins at 380, with anything below that deemed poor or very poor.

Can you remortgage with poor credit?

Yes, although your range of lenders may be smaller. Fortunately, Clever Mortgages specialises in helping those with poor credit find the right remortgage. We can guide you to the best lenders in the marketplace – ones you may not be familiar with. It’s common to find interest rates are higher on higher risk remortgages like these, but we’ll scour the market to find a competitive deal for you.

Do I need a credit check to remortgage?

If you switch to another deal with the same lender without asking to borrow more money, then no, you shouldn’t be credit checked. However, if you want to increase your mortgage or change to a new lender, any lender that considers you for a remortgage will want to know you are credit worthy. This will involve checking your credit score and assessing your suitability.

What you need to know before remortgaging

Firstly, if you’re approaching the end of your existing mortgage deal, make sure you start looking for a replacement deal three or four months ahead of the expiry date. If you don’t, your lender may switch you to their standard variable rate, which can be higher than getting another deal.

Next, make sure you shop around. Many people want to get a competitive deal as it could save them money each month, and more over the life of the mortgage. Some lenders may waive certain fees (such as arrangement fees), but they may charge a higher interest rate.

An experienced broker can weigh up different offers and consider all the figures and calculations before recommending one or more of the most competitive deals. This can take a lot of hard work out of the process for you. You may wade through lots of small print and miss some crucial facts, whereas a broker will know what to look for and how to accurately compare different deals.

You should also consider any charges involved with moving your mortgage. If you switch before you reach the end of your existing mortgage deal, there may be early repayment charges. A broker can advise on all relevant charges involved in remortgaging, both with your current deal and the one you may switch to.

Should you use a broker to remortgage?

There’s plenty to think about when you’re considering a remortgage, especially a bad credit score remortgage. There are plenty of lenders out there today, from banks to building societies you’d recognise the names of, through to smaller more specialist lenders. If you’re looking to remortgage with low credit score, you may benefit from our experience in this area. We specialise in helping those with bad credit. We can identify which lenders are most likely to approve each client in their unique situation.

Remortgage Calculator

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Representative Example:

Mortgage amount £170,995 (including £995 lender fee), 64 payments of £748.30 at a fixed interest rate of 2.28%, followed by 236 payments of £889.60 at a variable rate of 4.24%. Over a term of 25 years, giving a total amount payable of £258,861 at an APRC of 3.6%. The contract will be secured against your property.

Are there alternatives to remortgaging?

Yes, so if you’re unable to go for remortgaging with bad credit, there are still options to think about. These include:

  • A further advance with the same lender
  • A product transfer, i.e., switching to a different mortgage product with the same lender to get a better deal
  • A secured loan, i.e., taking out a loan backed by your property if you have enough equity in it to support this option

If this all sounds complicated, don’t worry. Clever Mortgages has extensive experience in helping our clients find the best remortgaging possibilities for their needs. And in cases where a remortgage isn’t possible, we can assist in exploring other options as shown above.

The idea of remortgaging can be overwhelming. Even if you think you may be able to save money if you change to another deal, you may be worried your low credit score may let you down. By coming to Clever Mortgages, you can take advantage of our expertise and knowledge in helping people tackle remortgaging with bad credit. Get in touch with us today to find out more. You could be closer to finding a suitable deal than you think.

Bad Credit Remortgage

If you’ve got a mortgage you might be able to make huge savings each month by remortgaging, even if you’ve got bad credit

We’ve helped hundreds of customers like you find a bad credit remortgage product that makes a real difference to their monthly outgoings. Here we’ll cover:
What a remortgage is, and reasons to consider remortgaging
How we helped our customer get a remortgage deal, even with bad credit
Why it’s best to go through a mortgage broker when you’ve got bad credit
Remortgaging could be easier than you might think – what your next steps are

What is a remortgage?

A remortgage is when you take out another mortgage on your home to replace your current mortgage, or to borrow extra money against your property.

You would remortgage a property to either raise or save money:

Raise money

You can raise money by releasing equity in your home and taking out a new mortgage that is larger than your existing one. You could do this to consolidate debts, make home improvements, or fund something else in your life.

Save money

You could save money by remortgaging and switching to a cheaper mortgage provider – making your monthly payments smaller each month. You will need to check the terms of your contract though to make sure you aren’t charged any early exit fees.

As your mortgage is likely to be your largest debt, it makes sense that improving on it can also give you the largest saving – a saving that can add up to thousands of pounds each year.

Exactly how much you could save will depend on several factors, including:

  • How much equity you have in your property
  • What your current deal is like
  • Whether there is a fee for ending your current mortgage deal
  • Whether your home’s value has increased
  • How much your remortgage costs

How we helped one customer by finding a bad credit remortgage:

With Clever Mortgages, Mr and Mrs C were able to:
Get a debt consolidation remortgage, even with a poor credit history Secure a fixed rate of 2.10% Save almost £500 each month on mortgage and debt repayments

 BalancePaymentRateProductTerm
Current Mortgage£61,000£4901.25%Lifetime tracker12 Years
Current Secured Loan £43,000£43610%Standard Variable Rate12 Years
Unsecured debts£44,320£657VariousVariousVarious
New Mortgage£150,000£1097.672.10%5 Year Fixed13 Years

Mr C had been in an IVA, which he’d now completed, and Mrs C was currently in a Debt Management Plan. They wanted to consolidate their secured loan, plus three other debts, into a new mortgage product – hoping that this would bring down their monthly repayments.

At Clever Mortgages we were pleased to be able to help them, and we secured them a new mortgage which is now saving them a significant £485 every month! This is making a real difference to their lives, and helping them get back on track, improving their credit score.

Watch our video on the remortgage application process

What do I need to know about getting a bad credit remortgage?

Remortgaging can help you to save money every month, and can also be a good way to get a lump sum of money, instead of taking out a personal loan.

As a mortgage is such a large financial commitment, it’s important to give it plenty of consideration – but don’t panic either, our team help customers every day to decide what to do next when it comes to mortgages and their situations. We can help you:

  • Understand different mortgage options, including fixed and variable mortgages
  • Understand also how equity releasing from your property can work
  • Consider any risks, such as whether you can manage the monthly repayments
  • Find out your potential best options for if you did go ahead and remortgage

Next steps for a bad credit remortgage

If you want some expert advice on remortgaging, and what it could mean for you – get in touch with our team today. You can call us on 0800 197 0504, or enquire online.

You can also find lots of advice on all things mortgages, in our Guides and Advice section.

What are the benefits of remortgaging?

A remortgage is when you take out another mortgage on your home to  replace your current mortgage– and we can help you with this, taking all the hassle away from the remortgaging process.

It’s sometimes possible to secure a lower rate, giving you the opportunity to consolidate your debts, whilst saving yourself money every month. Debt consolidation can be a good solution for some mortgage customers – however, it’s not suitable for everyone.

You should always review the total amount payable through consolidation,  not just the immediate savings in terms of a reduced monthly payment. Please be aware that any unsecured debts consolidated within the mortgage, would then be secured against your property.

We’ve helped 1000s of customers to remortgage – and bring their monthly payments down.

Want to remortgage with bad credit?

Worried about bad credit? We work with customers every day who have bad credit but want to remortgage – and we always do what we can to help.

Remortgaging could be easier than you might think – especially when you choose a broker who knows how to get you with the right lender to save you money.

Enquire with us about a remortgage with us, and we could:

A debt consolidation mortgage can help you save money every month – we recently helped Mr C who was nearing the end of his fixed rate deal, to consolidate his secured loan and mortgage into one monthly repayment reduce the mortgage term and save money.

Help get you back on track – being able to consolidate Mr C’s secured loan with a mortgage product meant only having to plan for one monthly payment instead of two, making the overall debt much easier to stay on top of.

Reduce the term of your mortgage – we can often help customers cut years off their mortgage – helping them to become mortgage free far sooner than they thought.

Why should I use a mortgage broker?

You’re likely to only have to do one application – this will save you time, and more applications from being recorded on your credit file

Some mortgages especially for people with bad credit are only available if you go through a mortgage broker

Brokers can advise on what would improve your chances – e.g. finding a guarantor or opting for a joint mortgage

They can take the hassle of application forms away – talking you through every step, and asking all the right questions

What next?

If you are looking for expert advice on remortgaging your property, contact our team today. We will be happy to help advise you on what you on your options.

We are experts in offering solutions to people with bad credit and can help you if you need a helping hand with your next move.

Get a call from a mortgage advisor at a time to suit you