Can you remortgage with bad credit?

Harry Mansell, CeMAP · Mortgage Specialist at Keyholder Mortgages · From the cases we see

Yes, it can be possible. Some lenders will consider a remortgage when there's bad credit on your file, either for the same amount or with extra borrowing. What decides it is the type of credit issue, when it happened, the equity in your home and each lender's criteria, so the full picture matters from the start.

Staying with your lender or moving to a new one

• Product transfer: A new deal with your current lender

• Remortgage: Moving your mortgage to a new lender

Both routes can work when your credit has changed since you first took the mortgage. Which one suits you depends on your circumstances and what each lender will accept.

Can you stay with your current lender if your credit has got worse?

Possibly. Each lender has its own rules for existing customers, and some will look at your circumstances again before offering a new deal. Asking your lender what they'd need from you is a sensible first step, and we can then compare that with what's available elsewhere.

Can you switch to a new lender?

Yes, if you fit their criteria. A new lender will check your credit file and assess affordability as part of the application. Going through your credit report against each lender's criteria before applying means the case goes to a lender that's likely to fit. Matching cases like this is much of our work as a remortgage broker in Sudbury, Suffolk.

Which credit issues should you tell your broker about?

All of them. CCJs, defaults, missed payments, mortgage arrears and IVAs can each be treated differently under lender criteria, and the type of issue can change which lenders are open to you. When your broker knows the full picture from the start, they can look for a lender whose criteria match your circumstances at the point you apply.

How does the equity in your home help?

More equity can widen your choice. Certain lenders cap the loan to value for applicants with bad credit, or ask for a larger share of the property to be yours outright. Loan to value is the size of your mortgage compared with your home's value. Having more equity doesn't guarantee an offer, but it can open up options that wouldn't otherwise be there.

Can you borrow more when you remortgage with bad credit?

It can be possible, as long as you meet the lender's affordability checks and criteria. People raise extra money for home improvements, a deposit for a buy-to-let or to consolidate debts. Think carefully before securing other debts against your home, as it can mean paying more overall.

From experience: A client came to us with mortgage arrears on her file. She also wanted to consolidate some debts as part of the remortgage, and we still made that happen, moving her to a new lender with the additional borrowing she needed.

What happens if your deal ends and you do nothing?

You'll usually move onto your lender's standard variable rate. That rate is often higher than a new fixed, tracker or discounted deal, depending on the lender. Depending on your lender, a new rate can be secured months before your current one ends, so looking at your options early helps you avoid that.

Our remortgage guide covers product transfers, switching lender and raising money in more detail.