Can You Remortgage With Bad Credit?

November 25, 2022

There has been very little seasonal cheer for mortgage holders over the past few weeks, with market turbulence causing mortgage rates to spike, and a yet another rise in interest rates by the Bank of England. For some people who are coming to the end of fixed term mortgage deals, these may be particularly concerning times.

The Guardian reports that the Nationwide building society has said that it is preparing for a rise in bad loans, and a reduction in new mortgage applications. They put this down to the surging cost of living and poor economic outlook for the UK over the next couple of years. 

Many households are struggling to transition to higher mortgage payments, which in some cases may mean hundreds of extra pounds a month. The UK has enjoyed a long period of very low interest rates, and family budgets are not always well placed to withstand the shook of sudden spikes, especially as food and energy bills are also soaring.

Kwasi Kwarteng’s ill-fated mini budget in September has made the situation worse. Although fixed term mortgage rates have fallen slightly since the initial volatility which caused them to spike to a peak of 6.65%, they are still way above the pre-mini-budget level of 4.5%. 

For home owners whose circumstances have changed over the past two or five years, the situation can be even more complex. There are many reasons why mortgage holders may have adverse credit circumstances, which could affect their prospects of securing a new mortgage deal.

However, it may still be possible to remortgage, even if you have a bad credit record. It’s advisable to speak to a broker who specialises in clients with adverse credit, rather than apply directly to lenders yourself. This is because a good broker will know which lenders are most likely to accept your application, and which ones to avoid.

Many high street lenders are tightening up their affordability criteria at the moment, in order to protect themselves against risk as the country heads into a recession, with all the uncertainties that the situation will bring. However, there are some lenders who specialise in clients with bad credit, and your broker will have established relationships with them.

This can save you a lot of time and effort, and will help to guard against the risk of a rejected application. Any rejected loan applications will be recorded on your credit file, and weaken your chances of securing a new deal even further. 

Your broker will want to know the reasons for your current record, of what nature the adverse circumstances are, such as a County Court Judgement, defaults, late payments, debt, and so on. They will also want to know what sums of money are involved, and if you have made any attempt to repay them. 

In many cases, they will find a lender with more flexible attitudes, particularly if there is an explanation, such as illness or redundancy, for your financial record. 

If you would like to talk to a mortgage broker for defaults, please get in touch with us today.

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

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