Alan is one of the most senior advisors, with over 25 years experience.
Can you get a remortgage with bad credit??? > YES.
We do loads of remortgages for people with bad credit and almost every time, customers come to us having been declined by a lender elsewhere, or worse, turned away by their broker. The truth is, bad credit mortgages are harder to do and as a result eligible customers are often neglected. We offer the professional service for ALL our enquiries, and strive to help anyone. As whole of market brokers, we are adverse credit remortgage specialists with links to lenders who even consider bespoke deals. So, if there is an adverse credit remortgage out there for you, well find it.
With any remortgage, bad credit can cause real problems. We are asked regularly, can i remortgage with bad credit? and specifically which types of credit issue are acceptable. Below is a list of the issues customers of ours have had and still been approved for a mortgage:- No credit history
- Low credit score
- Late payments
- Missed mortgage payments
- Defaults
- CCJs
- IVAs
- Debt management Schemes
- Reposessions
- Bankruptcy
- And mortgage customers with multiple credit problems
There are all sorts of different reasons customers look for a bad credit remortgage, including:
- Debt consolidation (bad credit mortgage refinance)
- Looking for a better rate
- Capital raising to purchase something (house/car/holiday etc)
- Let to buy remortgage with bad credit (remortgageing onto a buy to let and moving home)
- Marital split (remortgaging to buy out ex partner)
- Raising money for investment purposes (that not all lenders consider)
If youre looking for any of the above, or are simply just seeking some information, please get in touch and well have one of the experts offer you the advice you need.
Bad credit remortgages are a tricky thing to explain in one article and still make it relevant for everyone, because every situation is different. Lenders have certain criteria but then for certain customers, it may be possible to overturn a case that would usually be a decline, if it is a strong proposition for a lender regardless. Sometimes, customers with huge savings and great LTVs can obtain bad credit home mortgage refinance deals regardless of their credit history. Below is a step-by-step guide of the best way to remortgage for bad credit customers, to help them prepare for applications and to assist them in gathering the right info for us upfront, so we can be best placed to offer the right advice.
1) Dont go to your bank!
This is a very important step. I know it sounds so biased coming from a mortgage broker website but its true. We are NOT anti-banks, we all need them. We are pro helping you get whats best. Your bank is only ever in it to make a profit for themselves.
Theres good money in mortgages and as the market is so competitive, these single bank advisers are taught to gain comitment from enquiries as soon as possible. This minimises the risk of you strolling into the bank next door and finding a better rate, or worse, going online. As such, they are actively encouraged and often targeted to credit score any customer willing to sit in their office great if you dont want to shop around and have clean credit not great if youre looking for poor credit remortgages or want the best deals you can get.
Credit scoring with a lender that wont lend to you is an unneccesary and damaging process, that can often leave you in a worse position because a further credit score has been added to your file.
2) Get your credit report
Before you do anything (even before you dont go to your bank), you need to find out what youre working with. To remortgage with bad credit history it is vital to understand which issues will effect you, and how to overcome them by finding a lender or repairing your credit file. Remember: Its whats on your file thats important, so any late payments or other issues that havent been registered with a credit reference agency wont usually matter.
The only exceptions to this are when you are applying for a mortgage with your bank, where you may have exceeded on overdrafts or credit cards or had issues with other arrangements like direct debits bouncing etc, and your bank keeps a record of them on your account. These can be things they take into account with their mortgage credit scoring system, but arent usually required to report to credit reference agencies so only your bank would know about them. In these instances where your bank may give you a low or medium score because of issues on your account, other lenders outside of that banking group may give you a higher score Something to keep in mind if youre struggling to work out why youve been declined.
Also, its often the case where we help customers who have never checked their file and fear the worst, often having buried their heads in the sand, to then go on to find out things arent as bad as they thought. Actually, its surprising for a lot of people what is available in terms of bad credit remortgages in the UK, and that there are lenders out there with flexible criteria that still have competitive rates.
NOTE: We advise you sign up for all three of Experian, CreditReportsMatter, and Equifax. Each lender uses a different one and often times they show different informtion. Itll take an extra 5 minutes but if youve had problems and have been declined with a lender before, then its very much worth it. You will NOT be penalised or scored any differently for searching your own credit file with these agencies credit score is only affected by applications for credit. AND ITS FREE! Sign up for the free trials below and order your reports now.
Sign up for your free trials here
>>>Signed up before? If so you may not qualify for the free trial. Try CheckMyFiles one off search here as this is likely to provide the most comprehensive overview.3) Find a broker (see page on finding best broker here)
Establish your Loan to value (LTV)
Work out the property value and the amount of deposit/equity youll have after the new mortgage, to define the LTV. This figure is important because lenders base their criteria around the different LTVs, where those with higher LTVs must have better credit ratings than those with lower LTVs. Customers at 90% usually require good credit scores and clean (or very light) adverse credit, customers at 85% can qualify with lenders with mild adverse credit or severe but historical issues, and customers at 75% or less can often get mortgages with heavy adverse credit issues (depending on how recent they were).
Establish affordability
The broker must also check the loan you want is within the lenders limits. This is true of any mortgage, not just remortgages for bad credit. They tend to work out based on a multiple of your annual income a rough guide is 4x. So for a borrower on £50k the max might be £200k, however, certain lenders can offer up to 5x and in special circumstances go above and beyond this. The figures used by lenders changes when it comes to deciding what is and isnt classed as income usually the basic salary (or net profit for sole traders/partnerships, or directors salary + dividends if ltd company), is used for the full value. Other income such as overtime, bonuses, other employed income, and state benefits, may either be taken 100%, or as a lesser percentage, or not counted at all.
Map your credit file to the most appropriate lender
The broker will then research all the best remortgage deals for bad credit based on your loan amount and LTV, and work from the top down the list to the first lender that will be most likely to accept your application. Obviously if you have more severe credit history issues then a high street lender with the best deals is unlikely to approve you, so your rate and/or fees are likely to be higher. Dont let that scare you however youd be surprised that the deals tend not to be astronomical and actually are still competitive.
If theres no one that will consider your application due to your credit history at that particular LTV, then be prepared to find more equity/deposit to lower the LTV into a bracket that lenders will consider (this may only be a few % depending on your current situation, as lenders at 85% are much more flexible than at 90%). The alternative is being patient enough to wait for your credit report to recover over time, as the older the issues are, the less impact they have.
Click for a detailed article on How to recover your credit report as quickly as possible.
TOP TIP: One of the best things you can do to increase your credit score is to obtain an adverse specific credit card, and spend and repay in full on a monthly basis this helps to prove you can borrow and live within your means at the same time, and youll notice your score improve over the coming weeks and months. There are 2 options here, the first is a standard credit card specifically for those with bad credit, the second is for those who are declined for standard cards and need a guaranteed-acceptance card (usually if you have had more severe and more recent adverse credit). Wed recommend trying for the Vanquis card first, then go for the Mastercard if declined.
To ask an expert a question about bad credit history mortgages, fill out the quick enquiry form below
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