Emily's Mortgage Services LTD

Remortgaging can be a smart way to save money, access better rates, or release equity from your home. But if your credit history is less than perfect, you might be concerned about the  options available to you.

The good news? Bad credit doesn’t automatically mean you can’t remortgage. In fact, there are more solutions available than you might think, especially if you understand how the process works and where to look for specialist support… enter Emily’s Mortgage Services.

Let’s break down what you need to know if you’re considering remortgaging with bad credit. In this article we’ll explain what lenders look for, to practical steps you can take to boost your chance of approval.

Why Bad Credit Doesn’t Automatically Mean You Can’t Remortgage

Many homeowners worry that a poor credit score or a history of missed payments means the end of their remortgage hopes. Whilst it’s true that your options may be more limited, having bad credit doesn’t put you out of the running altogether.

The UK mortgage market is diverse, with lenders ranging from mainstream high street banks to specialist providers who are experienced in helping people with adverse credit.

They understand that financial setbacks happen for many reasons including redundancy, illness, or simply a tough period. What matters most is how recent and severe the issues are, and how you’re managing your finances now. If you’re proactive and prepared, remortgaging with bad credit is not only possible, but can also be a positive step toward improving your financial situation.

What Lenders Look At: Credit Scores, Affordability, and Loan-to-Value

When you apply to remortgage lenders consider a range of factors, not just your credit score. Here’s what they’ll typically assess:

• Credit Score: This is a key indicator of how you’ve managed credit in the past. Missed payments, defaults, or County Court Judgments (CCJs) will affect your score, but not all lenders treat these issues the same way.
• Affordability: Mortgage lenders will look at your income, outgoings, and overall financial stability. They want to see that you can comfortably afford the new mortgage payments, even if you’ve had credit issues previously.
• Loan-to-Value (LTV): This measures the size of your mortgage compared to the value of your property. The lower your LTV (i.e., the more equity you have in the property), the less risk you present to lenders. This may make it easier to secure a deal, even with bad credit.

Remember, every lender has different criteria. Some are much more flexible than others, especially when it comes to historic credit issues.

Typical Bad Credit Scenarios

Bad credit can mean different things to different people. Here are some common scenarios and how they might impact your remortgage options:

Missed Payments

Missing a payment on a credit card, loan, or utility bill can happen to anyone. If these are isolated incidents and happened a while ago, many lenders will overlook them—especially if you’ve kept up with payments since.

Defaults or CCJs

A default occurs when you fail to pay back a debt as agreed, while a CCJ is a court order for unpaid debt. These are more serious in the eyes of lenders. Some specialist lenders will consider applications even with recent defaults or CCJs, although you may face higher rates or need a larger deposit.

Debt Management Plans (DMPs)

Being on a formal debt management plan shows you’re taking steps to manage your finances, but it will be noted on your credit file. Some lenders will accept applicants with a current or historic DMP, but you’ll likely need to demonstrate a strong track record of repayments and may be limited to specialist providers.

Adverse Credit Lenders vs. High Street Banks: Where to Look for Deals

If you have bad credit, your first instinct might be to approach your current bank or a high street lender. However, these institutions typically have strict criteria and may reject anyone with recent credit issues.

Adverse credit lenders are set up to help people with imperfect credit histories. They’ll look at your situation in detail, considering factors like how long ago the issues occurred and what caused them. While their rates are usually higher, they can provide a vital solution if mainstream banks say no.

A mortgage broker – like the team at Emily’s Mortgage Services – with experience in adverse credit cases can be invaluable here. They’ll know which lenders are most likely to accept your application and can help you present your case in the best possible light.

How to Improve Your Chances

Even if your credit history isn’t spotless, there are practical steps you can take to boost your chances of securing a remortgage:

Credit File Clean-Up Tips

• Check your credit report: Review your file with all major agencies (Experian, Equifax, TransUnion) to ensure there are no errors or outdated information.
• Settle outstanding debts: Where possible, pay off or reduce any debts in arrears. Even small improvements can make a difference.
• Register on the electoral roll: Being registered at your current address helps lenders verify your identity.
• Avoid new credit applications: Multiple new applications can temporarily lower your score, so hold off until after your remortgage is complete.

Using a Mortgage Broker

A broker who specialises in bad credit mortgages can open doors you might not even know exist. They’ll have access to lenders who don’t deal directly with the public and can often negotiate better terms on your behalf. They’ll also help you prepare your application, ensuring you provide the right documents and explanations for any credit issues.

Building Equity

The more equity you have in your property, the better your chances of remortgaging on favourable terms. If you can, consider making overpayments on your current mortgage or waiting until your property has increased in value. A lower loan-to-value ratio reduces the lender’s risk, making them more likely to approve your application—even with bad credit.

Costs to Watch: Higher Rates, Larger Fees

Remortgaging with bad credit is possible, but it’s important to go in with your eyes open. Here are some costs to be aware of:

• Higher interest rates: Specialist lenders often charge more to offset the risk of lending to someone with bad credit. Over time, this can add up, so make sure you understand the total cost.
• Larger arrangement fees: You may face higher upfront fees for setting up your new mortgage. Always factor these into your calculations.

Ask for a full breakdown of all costs before committing, and compare deals carefully to make sure you’re getting the best option for your circumstances.

Conclusion: You Still Have Options To Remortgage With Adverse Credit

Bad credit can feel like a major roadblock, but it doesn’t have to mean the end of your remortgage journey. The UK mortgage market is more flexible than many people realise, with specialist lenders and brokers ready to help. By understanding what lenders look for, tidying up your credit file, and seeking expert advice, you can put yourself in the best possible position.

Need tailored advice or want to explore your options?

At Emily’s Mortgage Services we are experienced at sourcing remortgage solutions for clients with adverse credit. With our whole of market access to lenders, we can explore the most suitable product for your needs and help you find a mortgage that’s right for you.

Keen to learn more, talk to a member of our team today.