Can You Remortgage with Bad Credit? Here’s How to Get Approved

Can You Remortgage with Bad Credit? Here’s How to Get Approved

If your credit history has deteriorated since you first took out your mortgage, you may be wondering whether it is still possible to remortgage. Missed payments, defaults, CCJs, or other adverse credit markers can make refinancing feel uncertain, especially if your existing deal is coming to an end.

The short answer is that it may be possible to remortgage with bad credit, but lender options are often more limited, and approval depends on several factors beyond credit score alone. This guide explains how remortgaging with bad credit works in the UK, what lenders look at, and how people typically prepare before applying.

This article provides general information only and does not offer regulated mortgage advice.

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What Does Remortgaging with Bad Credit Mean?

Remortgaging with bad credit involves switching your existing mortgage to a new deal while having adverse credit recorded on your credit file. This could include refinancing with your current lender or moving to a new lender.

Bad credit may have occurred:

• After your original mortgage completed
• During a period of financial difficulty
• As a result of missed payments on other credit commitments

Lenders assess not only what happened, but when it happened and how your finances have been managed since.

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Types of Credit Issues That Affect Remortgaging

Bad credit can cover a wide range of situations, such as:

• Missed or late payments
• Defaults
• County Court Judgments (CCJs)
• Debt management plans
• Individual Voluntary Arrangements (IVAs)
• Bankruptcy (historic or discharged)

Each type of issue is assessed differently. For example, an isolated missed payment several years ago is treated very differently from multiple recent defaults.

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Can You Remortgage with Bad Credit?

In general terms, yes, it may be possible to remortgage with bad credit, but outcomes depend on:

• The severity of the credit issues
• How recent they are
• Whether issues are resolved or ongoing
• Your current income and affordability
• Your loan-to-value (LTV)
• The amount of equity in your property

Some homeowners are able to remortgage successfully, while others may find options are limited until their circumstances improve.

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Remortgaging with Your Existing Lender

One of the most common routes for people with bad credit is staying with their current lender.

Existing lenders may offer:

• A product transfer
• A new fixed or variable rate
• A switch without full credit reassessment

In many cases, product transfers involve fewer checks than a full remortgage. Some lenders do not carry out a full credit check or affordability assessment, though this varies and is not guaranteed.

Staying with your lender does not always provide the most competitive rate, but it can be the most accessible option when credit has worsened.

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Remortgaging to a New Lender with Bad Credit

Switching to a new lender involves a full mortgage application.

This usually includes:

• Credit checks
• Affordability assessments
• Property valuation
• Legal work

When bad credit is present, mainstream lenders may decline applications, while near-prime or specialist lenders may consider them, depending on the circumstances.

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The Importance of Loan-to-Value (LTV)

Loan-to-value is one of the most important factors when remortgaging with bad credit.

Lower LTVs generally improve options because:

• The lender’s risk is reduced
• More lenders may be willing to consider the application
• Rates and terms may be more competitive

For example, a borrower at 60% LTV is usually viewed more favourably than one at 85% LTV, even with the same credit issues.

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Equity and Its Role

Equity is the difference between your property value and your outstanding mortgage balance.

Higher equity can:

• Improve lender confidence
• Offset some credit risk
• Increase access to specialist lenders

However, equity alone does not guarantee approval. Affordability and recent financial conduct remain essential.

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Affordability Checks Still Apply

Even if your mortgage balance is manageable, lenders must confirm affordability.

They typically assess:

• Income and income stability
• Household expenditure
• Existing credit commitments
• Dependants
• Stress testing against higher interest rates

If your income has reduced or outgoings have increased, this can affect borrowing even where credit issues are minor.

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Credit History and Recency

Recency is often more important than severity.

• Historic issues (over three to six years old) usually carry less weight
• Recent issues (within the last 12 months) are assessed more cautiously

Demonstrating a period of improved financial behaviour can significantly influence lender decisions.

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Bank Statements and Account Conduct

Lenders often review recent bank statements as part of a remortgage application.

They may look for:

• Regular income payments
• Controlled spending
• Minimal overdraft usage
• No recent missed payments or returned items

Strong recent conduct can help demonstrate that credit problems are not ongoing.

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Interest Rates When Remortgaging with Bad Credit

Remortgaging with bad credit often involves different pricing compared to standard deals.

This may include:

• Higher interest rates
• Product or arrangement fees
• Fewer fixed-rate options

Some homeowners use specialist remortgage products as a temporary solution, aiming to move to mainstream deals later if their credit profile improves.

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Early Repayment Charges (ERCs)

If you are still within a fixed or discounted mortgage period, early repayment charges may apply.

ERCs can:

• Increase the cost of remortgaging
• Make switching lenders less viable
• Influence the timing of a remortgage

These costs should be considered alongside potential savings.

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Remortgaging to Raise Additional Funds

Some people remortgage with bad credit to raise funds for purposes such as:

• Home improvements
• Debt consolidation
• Buying another property

Raising additional borrowing usually involves stricter affordability checks and may be harder to achieve with adverse credit than a straight remortgage.

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Specialist Remortgage Lenders

Most bad credit remortgages are handled by specialist or near-prime lenders.

These lenders typically:

• Use manual underwriting
• Assess applications on a case-by-case basis
• Consider context behind credit issues
• Apply higher rates and stricter terms

Mainstream lenders usually require cleaner credit profiles.

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Common Misconceptions

“Bad Credit Means I Can’t Remortgage”

While more difficult, remortgaging is not always impossible.

“My Current Lender Will Automatically Agree”

Product transfers are not guaranteed, and criteria still apply.

“Equity Cancels Out Bad Credit”

Equity helps, but affordability and conduct remain critical.

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Preparing Before Applying

People considering remortgaging with bad credit often prepare by:

• Reviewing credit reports carefully
• Allowing time for issues to age
• Reducing unsecured debt
• Improving bank account conduct
• Checking current mortgage terms and ERCs

Preparation does not guarantee approval, but it can improve outcomes.

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What If You Cannot Remortgage?

If remortgaging is not currently possible, some homeowners:

• Remain on their lender’s standard variable rate
• Take a product transfer where available
• Delay remortgaging until credit improves

In some cases, waiting can lead to better options later.

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Long-Term Planning After Remortgaging

If you remortgage with bad credit, longer-term planning is important.

Some people aim to:

• Improve credit conduct over time
• Reduce LTV gradually
• Move to mainstream products at a later date

Understanding that the first remortgage may not be the final solution helps manage expectations.

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Summary

So, can you remortgage with bad credit? In many cases, yes, but options depend on the type and timing of credit issues, loan-to-value, affordability, and lender criteria. Staying with your current lender or using a specialist lender may be possible routes, often with higher rates and stricter terms.

Understanding how lenders assess bad credit remortgage applications and preparing carefully can help homeowners approach the process with realistic expectations.

This article provides general information only. For personalised guidance, regulated mortgage advice is required.