Remortgage with Bad Credit

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Can You Remortgage With Bad Credit?

Can I Remortgage with Bad Credit?

Whilst there are some important things to consider, It is possible to be accepted for a remortgage if you have bad credit. Perhaps most importantly, you are likely to pay higher interest rates on a remortgage, or indeed, any type of mortgage if you have bad credit. Below we will look into the specifics of these circumstances.

How can I Improve my Chances of my Remortgage Application Being Approved?

Give it time

Whilst it might not be the most attractive option, waiting for a while before submitting your remortgage application can make a difference to whether or not you are accepted. Blemishes on your record can be seen as less serious over time, especially if your financial situation improves.

If you’re not able to wait out your poor credit history, there are things that you can do proactively to improve your score. It’s wise to view your credit file before you decide whether or not to proceed with an application. Some credit reference agencies, such as ClearScore, allow you to see your credit report for free. 

Repair your credit history

It is possible to take actions to repair your own credit score. First of all, check that the information held about you is correct. If you have a list of previous addresses or dormant credit accounts, such as old phone contracts, this can reflect badly on your score. It is usually possible to ask the credit reference agencies to remove entries that are incorrect or no longer relevant.

Establish a pattern of consistent payments and responsible credit usage. This might be through paying off the existing debts that caused the marks on your credit file. You can also stay within 50% of any credit limits that you have on credit cards and pay off the monthly spends in full. Of course, you should always be sure to make prompt repayments on your mortgage a priority.

Present as a lower risk

Whether you have waited for your credit score to improve or proactively spent some time improving it, it’s best to present as less of a risk to the lender. So, for example, ensure that you have a stable income and offer a higher deposit. 

Considering cheaper properties will not only lower the deposit you need, making a higher offer more possible, but will lower the LTV (loan to value rate) of a potential remortgage.

Have an honest and thorough explanation about your poor credit score

Lenders are interested in the reasons behind your lapse in financial management as well as any efforts you’ve made to rectify the situation. It’s important to be honest about your reasons, because lenders will conduct thorough searches. Being dishonest about your credit history will not go in your favour.

Buying with a partner 

Lenders will consider the credit history of both mortgage applicants when assessing the risk involved with lending. If your partner has an immaculate credit record, then it may draw some attention away from your low credit score. You should consider, however, how this will affect your partner’s future credit history. 

In contrast, if your partner is the one with the poor credit history, you may be more likely to be accepted if you apply on your own. Of course this will also depend on your personal income.

Will I pay more for a Mortgage if I Have Bad Credit?

Whilst remortgaging can generally help cut debt, this is not necessarily the case if you have bad credit. It’s possible to save money through remortgaging if you have bad credit, but you should consider that the interest rates available to you will be higher, especially if you currently have a fixed rate mortgage.
The interest rates you’re offered will be key to deciding whether it will make your debt situation better or worse. These will vary both from lender to lender and depending on the reason for your adverse credit. It is therefore always best to seek advice before considering remortgaging with bad credit.

How Can a Mortgage Broker Help?

If you have considered all of the above and want to go ahead with a bad credit remortgage application, it is strongly advisable that you speak to a qualified Mortgage Broker who will be able to assist you. 

At Bespoke Mortgage And Finance Centre will have access to specialist lenders that are more likely to accept your application. They offer a comprehensive range of mortgage contracts across the market and find you the best remortgage deals for your set of circumstances.

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