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How to remortgage with bad credit

At Tailored Money, we believe a poor credit history shouldn’t stop people from being able to remortgage their homes. One of our primary services involves helping people to remortgage with bad credit. An imperfect credit rating shouldn’t mean having to miss out on affordable remortgaging deals, or being able to consolidate your finances. Yet many people don’t know where to start when it’s time to look for bad credit remortgages. They find the process of applying for a remortgage daunting, with large volumes of paperwork and no guarantee of success.

There’s also a lot of confusion about the reasons people might remortgage, since this can be done for a number of reasons:

  • It’s a great way of consolidating existing debts into a single, fixed monthly payment secured against your property
  • It can help to lower mortgage payments if you’re struggling financially – taking a mortgage with a longer overall repayment period, or one that allows payment holidays
  • It can release equity from your property if it’s increased in value since you bought it
  • It allows you to borrow more money to fund a new car or home improvements
  • It lets you achieve a better interest rate or negotiate better payment terms when your current mortgage’s fixed rate period comes to an end, usually after two or five years.

Over the years, Tailored Money has helped numerous customers with credit card debts and overdrafts to obtain flexible and affordable remortgage products. Our expertise lets us identify which products could transform your finances, and which lenders offer remortgages to people with bad credit. We’ll help you to find products which mean you can stay in your home and enjoy the reassurance of being in a stronger financial position. Remortgaging could reduce interest rates and cut your monthly outgoings. We’ve already helped thousands of people to remortgage with bad credit, and we can do the same for you – regardless of your circumstances. Let Tailored Money take the weight off your shoulders, by finding you a remortgage deal which can consolidate your existing debts into one easy monthly payment.

The circle of strife

Debt can quickly become a vicious circle, as it’s easy to build up but hard to get rid of. It’s surprisingly easy to find yourself in financial difficulties, often through unforeseen circumstances, or as a result of historic events like unemployment or divorce. These traumatic events can lead to growing credit card balances and maxed-out overdrafts, with hefty interest payments chipping away at your ability to repay your debts. Indeed, hidden charges and overdraft fees tend to make an already difficult financial situation considerably worse.

Many people assume that having bad credit makes remortgaging impractical, or even unachievable. They believe anything less than a perfect credit score and a flawless history of debt repayments will scare off potential mortgage lenders. Yet remortgaging with bad credit can often be the best way to manage your debts. And most of us have debts of some description, from student loans and overdrafts to car loans and PCP agreements. Mortgages are simply a different kind of long-term financial commitment.

Tailored Money can help you to remortgage with bad credit, consolidating your debts into a single manageable monthly payment. That brings peace of mind, reduces monthly payments and charges, and simplifies your financial affairs. Best of all, it avoids damaging alternatives such as bankruptcy, or the repossession of your home. But how can you remortgage with bad credit? And what does this process actually entail?

What is classed as bad credit?

Millions of people throughout the UK have a less than perfect credit history. A number of historic and current factors might affect your ability to remortgage with bad credit. These may include:

  • County Court Judgements or Individual Voluntary Agreements
  • A history of missed or late repayments
  • Defaults on past debts
  • Debt relief orders
  • Repossessions
  • Bankruptcy

You might also struggle to remortgage if you have no credit history, while some people have been turned down for a mortgage because they’ve previously made a high number of credit applications. These can be easily forgotten about, but each individual application is recorded against your name for many years. It’s not always obvious that you’re going to be credit checked when signing up for a store card, or getting a quote from a car dealership about a new PCP/leasing deal.

The underwriters who make decisions about whether or not to approve remortgage applications will often view adverse credit histories unfavourably if they aren’t experienced poor credit mortgage brokers. Application forms for mainstream lenders are fairly rigid and unsympathetic to financial difficulties, resulting in a negative decision for anyone without an impeccable credit history. It’s much easier for these firms to simply say ‘no’ and move onto the next application. That’s why you should approach a specialist bad credit remortgage provider like Tailored Money instead.

 

How do I remortgage with bad credit?

 

Because mortgages are long-term financial commitments, lenders are understandably cautious about who they lend to. Many mainstream mortgage companies will reject an application to remortgage with a bad credit history. They might promise to consider applications for mortgages with bad credit, but their underwriters will often refuse to authorise an offer. The small print which accompanies mortgage applications generally gives lenders wriggle room to decline people whose credit histories are less than perfect.

Because mortgage applications are time-consuming, we’d recommend you avoid approaching companies one at a time. Googling “how to remortgage with bad credit” won’t always deliver accurate results, either. And high street lenders are often reluctant to help people with bad credit – despite the claims made in their marketing literature. That’s why you should start your remortgaging journey by speaking to one of Tailored Money’s friendly experts.

Unlike risk-averse mortgage providers or cautious high-street lenders, our trained bad credit mortgage advisors will approach your case with enthusiasm. Our advisers and underwriters have helped many people with bad credit across the UK – there’s nothing we haven’t seen before. We analyse the whole mortgage market, shortlisting lenders to optimise your chances of being approved. And because we have a national network of highly experienced finance brokers, we can help homeowners across the UK to achieve a flexible, affordable and appropriate secured loan.

 

What will Tailored Money do?

 

One of our specialist mortgage brokers will sit down with you at the start of your remortgage journey. They’ll discuss your circumstances, your credit history and your available budget. Next, they’ll take a look at your existing debts, recommending products which would allow you to clear those debts over the mortgage’s lifetime. We’ll ensure you’re in a position to make the monthly payments, and we’ll explain the differences between different product types.

For example:

  • Fixed-term mortgages guarantee your monthly payments for a period of several years, giving you confidence in your ability to repay.
  • Tracker mortgages vary according to the Bank of England interest rate. If it drops, so will your monthly repayments.
  • Capped rate mortgages follow variable interest rates, but are guaranteed not to rise above a certain level – ensuring your monthly repayments have a defined ‘ceiling’.

We have strong relationships with many of the UK’s leading mortgage lenders, and our brokers understand the market. We can identify different products, how they work, and whether they might be suitable for your unique circumstances. Our advisors know how to put a strong case forward on your behalf, even if you have existing debts and a low credit score – we won’t recommend mortgage deals you’re likely to be turned down for. We’ve helped many people in restricted financial positions to obtain competitive mortgages at low interest rates – banishing other debts to bring welcome peace of mind.

Best of all, we make it easy to remortgage with bad credit. Our staff know how to explain things in clear terms, avoiding industry jargon and only telling you what you need to know. (You can jump over to our guide to industry jargon here [JARGON]). We’re friendly and approachable, with ongoing support for our existing customers. And everything you tell us will be treated with the utmost confidence.

 

What are the key benefits of remortgaging?

 

For many bad credit remortgage clients, the biggest benefit involves being able to eliminate historic or current debts by releasing additional cash up front. This is then paid back over the lifetime of the mortgage, at a manageable and predictable monthly rate. This is an ideal way to break out of the cycle of late payment fees, or spiralling interest on accumulated debts.

Another advantage of remortgaging is the ability to unlock equity in your home. Although house prices can fluctuate, the historic trend in property values has always been upwards. In most parts of the UK, the house you live in today will be worth more than it was five years ago. And remortgaging may provide a way to unlock some of this equity. If your home has significantly increased in value, you could wipe out old debts and still manage to negotiate a lower loan-to-value amount – the percentage of the property’s total value you need to borrow. Lower LTVs generally result in more competitive deals and lower interest rates, since higher amounts of equity mean mortgage companies are more likely to get their initial investment back.

The third main benefit of remortgaging involves moving away from a less competitive mortgage vehicle. Most mortgage companies offer introductory rates, but once these have ended, customers tend to end up on less competitive Standard Variable Rate mortgages. It’s common to end up paying substantially more in interest each month, without anything to show for it. Plus, you might be in a stronger position to get a good deal if your circumstances are more favourable than when you first took out the mortgage. Perhaps your income has gone up, or you’ve paid off a debt which affected your original mortgage application.

 

Points to consider when remortgaging with bad credit

 

Tailored Money specialises in bad debt remortgages, and we’ve helped numerous people throughout the UK to simplify their finances. However, there are a number of points to consider before beginning a remortgage application with bad credit:

  • What debts do you currently have? Your mortgage advisor will need to know your full background, which might involve sorting through paperwork and giving us stacks of bank statements and letters.
  • How strong is your credit score? It’s possible to check your credit score for free, using companies like Experian and Equifax. Scores can vary between credit reference agencies, and are only ever a guide to your financial health.
  • Are any of your financial affairs linked to other properties? If you’re still getting bank statements sent to an old address, or have debts connected to a past relationship, this is a good time to simplify matters.
  • Have you made lots of credit applications in recent years? This can cause problems, because it suggests you might have a relaxed attitude to acquiring credit. By dealing with Tailored Money, you’ll minimise the number of applications being made.

Many people will focus on the interest rate attached to a mortgage, overlooking other key criteria. It’s easy to assume the product with the lowest initial rate is the best one, even if the fixed-rate period is shorter than other mortgages. Certain lenders impose hefty arrangement fees or demand huge exit penalties if you need to repay the mortgage early, while other hidden costs can include admin fees and valuations. The Tailored Money team can explain these costs in simple terms, ensuring you aren’t stung by hidden costs further down the line.

It’s also worth noting that a bad credit remortgage is likely to cost more than a comparable product from a high street lender, because the mortgage provider has to cover a higher element of risk. Nonetheless, more and more mortgage lenders are entering this sector, increasing competition and driving down mortgage rates. These rates are increasingly close to the ones an applicant with a very strong credit score might expect to be offered. The Tailored Money team will always steer you towards these more favourable lenders.

 

How much information do I need to share?

 

We appreciate that debt is a sensitive subject, and many people are uncomfortable revealing the full state of their financial affairs. This can be particularly true if your credit history has been affected by a current or former partner. However, you’re in safe hands at Tailored Money. We’ve helped people with huge legacy debts to secure their financial footing. Whatever your circumstances might be, we’ll have enabled people in worse positions to bring their financial affairs under control.

To help us choose the right remortgage vehicle for your specific circumstances, we ask you to be completely open about your debts. Remember, we’re here to help rather than to judge. Everything you tell us will be treated in strict confidence, and it’ll only be disclosed when we approach mortgage companies on your behalf. There’s no reason to feel self-conscious about admitting to historic debts, and you shouldn’t be embarrassed about fees and interest charges preventing you from living debt-free. However, because mortgage underwriters will analyse each application in detail, it’s important for us to present the strongest case we can for each applicant. Achieving a successful outcome requires full disclosure at the outset.

Our specialist mortgage brokers will never allow you to enter into a remortgage agreement unless you can afford the monthly repayments. There’s no point trying to consolidate current or historic debts if the cost is too high, which is why we ask for full disclosure of your financial circumstances. You can find more information about this on our FAQ page.

 

How many lenders offer bad credit remortgages?

 

Many mainstream mortgage providers offer bad credit mortgages. Specialist lenders have also entered the market in recent years, reflecting the growth in this area. Interest rates for bad credit mortgages can be impressively low, with competition among lenders providing a varied choice of interest rates and deposit percentages. However, generic price comparison websites and mortgage calculators may not be suitable for people with more complex financial backgrounds. They certainly won’t explain whether a lender accepts applications from people with recent defaults or IVAs, or whether something that happened five years ago will affect a new remortgage application.

Every mortgage company has their own unique criteria for lending money. Niche lenders are often better than more mainstream firms in terms of accepting higher risk, or consolidating historic debts. That’s why Tailored Money maintains strong working relationships with specialist firms, as well as familiar high-street brands. We know which companies will regard a few late bill payments as insignificant, and which lenders will accept applications from people with CCJs to their name.

New providers enter the market on a regular basis, but these are some of the companies currently offering bad credit remortgages:

  • Aldermore
  • Bluestone Mortgages
  • Buckinghamshire Building Society
  • Foundation Home Loans
  • Marsden Building Society
  • Masthaven Bank
  • MBS Lending Ltd
  • Pepper Money
  • Precise Mortgages
  • Vida Homeloans

Although mortgage interest rates vary according to economic and financial events, Tailored Money has previously helped people with bad credit to remortgage with interest rates of just three per cent. Consolidating debt into manageable mortgage payments can slash the amount of interest payable, as well as eliminating punitive fees and charges incurred through other debt vehicles. Mortgage companies increasingly recognise this money could be better spent on fixed and predictable mortgage payments, which is why the market has gradually expanded.

 

Is my home at risk if I remortgage with bad credit?

 

The answer to this is generally no. Tailored Money’s specialist mortgage brokers will ensure any bad credit remortgage deal you’re offered is affordable. And providing you make your monthly payments, there’s no reason why your home would be at risk. The lender will be happy as long as they’re getting their money back to a pre-agreed schedule. And since many of our clients want to consolidate debts they’ve previously struggled to manage, we recognise how important it is to meet that repayment schedule.

At the same time, it’s vital to ensure any mortgage deal you apply for will be manageable. Debt generally begins to build when people end up living beyond their means for any number of different reasons. It’s our job to ensure your next remortgage deal is affordable today, tomorrow and potentially years into the future. This is why we’ll ask for the full details of your financial affairs and any existing commitments you may have. Armed with this knowledge, we can minimise the risk of your home being repossessed by the lender, by maximising your ability to meet those monthly repayments.

Although we will talk you through every stage of the remortgaging process, we actively encourage questions. Don’t be afraid to ask us about specific scenarios, or to request the full details of a particular remortgaging deal. You can contact us [CONTACT] at any time, whether you’re making your first enquiry to Tailored Money or whether you’re midway through the remortgaging process.

 

What timescales are involved in remortgaging?

 

Each lender has its own unique application process. Some firms specialise in rapid turnarounds, for people whose circumstances have unexpectedly changed (or may be about to). Others work more slowly, giving their underwriters plenty of time to decide whether the applicant can realistically make the scheduled monthly payments.

Some remortgaging applications take months to finalise and process. That’s why we’d encourage you to contact Tailored Money as soon as you start thinking about remortgaging. Mortgage offers tend to be valid for six months, but it’s better to have plenty of time to dot the I’s and cross the T’s than be rushing to meet a deadline. This is particularly true since your existing mortgage may be about to drop onto the lender’s Standard Variable Rate, also known as an SVR. These tend to be more expensive than any fixed-term deal you might previously have been on.

If you’re considering remortgaging in the next six months, get in touch with the team at Tailored Money. We can discuss your circumstances, determining the optimal time to begin searching for bad credit remortgage deals. It may be advisable to act quickly if interest rates are rising and you currently have a tracker or variable rate mortgage. On the other hand, it may be necessary to specify a particular starting date to avoid incurring early repayment fees. These can be buried away in the small print of your existing mortgage contract, potentially involving a significant sum of money. Our trained advisors will be able to identify the optimal date for a bad credit remortgage to begin.

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