Bad Credit Remortgage

Can you get a remortgage after bankruptcy, or with a CCJ, IVA or default?

Bankruptcy: With bankruptcy, you won’t be able to apply for a remortgage until you’ve been officially discharged. That usually takes about 12 months. Once you’re discharged a lender may agree to the mortgage, but you’ll be looking at quite high rates.

CCJ: It depends on the amount, when it was registered, and whether it’s been settled. It could also be that you have more than one. We had one applicant who went travelling to Australia for 18 months. No one was checking his post and he had received all these notices and CCJs on missed bills. He came back from travelling, got a really good job and was ready to buy a home – then had a big shock when he saw his credit file. He settled all the CCJs and once he was out of a certain time period we could get him a mortgage deal.

IVA: An IVA is an involuntary arrangement. It can be tricky to find a mortgage with an IVA, but it’s not impossible. With an IVA, you’ve come to an arrangement with your creditors to repay an affordable amount over a certain time. A lender may ask to see proof that you’re keeping up with those payments over 12 to 24 months, but each one will treat IVAs differently. Some lenders view these as high risk, others don’t.

DMP: If you’re applying for a mortgage after a debt management plan, there are steps we can take. We’ll look at how long it’s been for and the extent of it.

Defaults: Defaults are less of an issue if they have been satisfied. We had someone with lots of defaults over two years and a high street lender was happy to take that customer. It helped that their income was good and the amount they were borrowing against the value of the property was low. There was a plausible reason for the defaults as they were going through a divorce.

Generally, with bad credit it’s all about when the issue was registered, the amount and when it was satisfied.

What deals and rates are available if you are remortgaging with bad credit?

Rates change on a daily basis and there’s many things we need to consider. It’s not just credit, it’s the Loan to Value, the property type and more – so I can’t give you a general rate. Let us do the research and we’ll let you know based on your circumstances.

In October 2022 we had rates shoot up, thankfully now in January 2023 rates are coming down again. Just ask us when you’re ready – we can give you the rates at that time and take it from there.

Are there many bad credit remortgage lenders?

Every lender has their own quirks and risk appetite. Some high street banks have realised that with the current cost of living crisis, a bill may be missed here or there. Some providers are very quick to put a missed payment or late notice on your credit profile, but many lenders are comfortable with bills being a bit late.

Almost every lender has a policy on credit. Some offer really low rates but only want a completely clean profile. But generally we’ll find a lender for your remortgage.

Is it better to improve my credit rating before remortgaging?

If you know that your credit report has got something on it that could affect your remortgage, it might be best to wait. But speak to us first, because what you think is bad credit might not actually be that serious.

We mentioned earlier an applicant that hadn’t paid their parking fine. The CCJ was for £125, registered in April last year. He found out, he paid for it and we just waited for it to be satisfied. The mortgage has just been offered and they’re well on their way. But they were panicking when they came to us. Don’t panic – just talk to us.

How do I improve my credit score?

First of all, look at Checkmyfile and make sure that all of the information there is correct. Credit providers sometimes just get the names wrong or some credit isn’t on there. Make sure the information is correct. Check you’ve registered to vote as well.

Look for any links to any other people or financial associations. For example, if you are no longer with a partner and you had bought a sofa together on credit – if they are named but not paying their share, that could affect you. So remove any financial links to anyone that you’re not currently with.

Pay your bills by direct debit. Set up a direct debit for the minimum payment on your credit card so you know that will be paid. Don’t take out as much credit as you can. I see so many people with four or five credit cards with £5,000 or £10,000 limits. Having access to that much credit might mean you’re perceived as high risk. Also, close any unused accounts.

We often get First Time Buyers who haven’t really got a credit history because they are house sharing and bills are in other people’s names. Social housing providers, larger property management companies and also private landlords can actually add information onto your credit profile.

Your rental payments can be included on your Experian credit report with a scheme called the rental exchange scheme. That can boost credit score for renters. There’s also something called Experian Boost which lets you add your council tax payments, video and music streaming subscriptions, Amazon Prime etc. to demonstrate to lenders that you’re able to keep up to date with your payments.

The more credit that you’re keeping up to date with creates a good track record.

How do I apply for a remortgage with bad credit?

Come and speak to an expert. Let us interpret your credit report, apply your set of circumstances and do the research to give you the answers that you need.

Don’t be shy. Some people are ashamed of their credit issues, but don’t be – there’s always a reason. You might not be good at managing your money or you may have gone through a life event that has caused issues. Come and speak to us because we’ve seen it all and we’ll be able to guide you through it.

We’ll tell you if we can do something, and if not we’ll work with you to get you in a better position.

Think carefully before securing other debts against your home.

You may have to pay an early repayment charge to your existing lender if you remortgage.

Your home may be repossessed if you do not keep up with your mortgage repayments.

There may be a fee for mortgage advice. The precise amount will depend on your circumstances, but will be agreed with you before proceeding.