Can You Remortgage With Bad Credit?

In today’s fluctuating financial landscape, having a good credit score is a valuable asset, especially when considering options like remortgaging. But what happens if you have bad credit? Does that mean the door to remortgaging is firmly shut?

If you’re contemplating remortgaging and are concerned about your credit score, this guide is for you. Here, we delve into the nuances of remortgaging with bad credit and provide insight into possible pathways available.

1. Understanding the Basics

Remortgaging refers to switching your current mortgage to a new deal, either with your existing lender or a new one. It’s a strategic move often taken to secure a better interest rate, release equity from a home, or consolidate debts.

A credit score, on the other hand, is a numerical representation of your creditworthiness. Lenders use this score to gauge the risk involved in lending to you. A lower score may signify higher risk, which can impact the mortgage terms you’re offered.

2. The Impact of Bad Credit

Having bad credit doesn’t automatically disqualify you from remortgaging, but it can complicate the process:

  • Higher Interest Rates: Lenders might offer you a higher interest rate, reflecting the perceived risk of lending to someone with poor credit.
  • Stricter Loan-to-Value (LTV) Requirements: You might need to have more equity in your home before you can remortgage.
  • Limited Choices: Not all lenders are willing to work with borrowers who have bad credit, limiting your options.

3. Factors Lenders Consider

Apart from your credit score, lenders also examine:

  • Your Current Equity: The more equity you have in your property, the more appealing you may be to lenders.
  • Recent Credit Behavior: If you’ve taken steps towards improving your credit in recent months, some lenders might view this favourably.
  • Your Income and Employment Stability: A stable income can sometimes counterbalance bad credit in a lender’s decision-making process.
  • Existing Debt: If you’re heavily in debt, it might be challenging to secure favourable remortgage terms, even if you have significant equity in your home.

4. Strategies for Remortgaging with Bad Credit

  • Consider Specialist Lenders: Some lenders specialize in mortgages and remortgages for individuals with poor credit. They might offer solutions tailored to your situation.
  • Improve Your Credit Score: Before remortgaging, take steps to improve your credit. This could involve paying off outstanding debts, ensuring your credit report is error-free, or even just demonstrating a period of financial stability.
  • Seek Professional Advice: Consulting with a mortgage broker can provide invaluable insight. They might be aware of lenders and deals that you haven’t considered.
  • Build Up More Equity: By waiting a bit and building up more equity in your home, you might be in a better position to negotiate a remortgage deal, even with bad credit.

5. Final Thoughts

While having bad credit can pose challenges when seeking to remortgage, it isn’t an insurmountable barrier. By understanding the landscape, exploring all available options, and perhaps seeking guidance from professionals, homeowners with less-than-perfect credit can still find paths to successful remortgaging.

For more insights, tools, and advice on mortgages and remortgaging in the Canadian landscape, trust the expertise of We’re here to guide you through every step of your home financing journey.

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