This article is for general information only and does not constitute regulated mortgage advice. All mortgages are subject to status and lender criteria. Finance 4 Homes Ltd is an Appointed Representative of Beneficial Ltd, authorised and regulated by the Financial Conduct Authority (FCA No. 736655).
For many homeowners, remortgaging can be an effective way to lower monthly payments, consolidate debts, or unlock equity. But what happens if your credit history is less than perfect?
Maybe you’ve missed a few payments in the past, had a default, or even a County Court Judgment (CCJ). If so, you might assume that remortgaging is off the table. The good news is—it isn’t. The mortgage market has evolved, and a bad credit history doesn’t automatically mean you’re stuck with your current deal forever.
In this guide, we’ll explore what remortgaging with bad credit really means, how lenders assess risk, and the practical steps you can take to improve your chances.
Understanding What “Bad Credit” Really Means
Bad credit is a broad term that covers a range of financial events that may have negatively affected your credit file. This could include:
- Missed or late payments on loans, credit cards, or utilities
- Defaults or CCJs
- Debt management plans or IVAs (Individual Voluntary Arrangements)
- Bankruptcy or repossession
Each of these is recorded on your credit report and typically remains there for six years. However, not all credit issues carry the same weight.
- Age matters: A default from five years ago carries less risk than one from five months ago.
- Severity matters: A small, satisfied CCJ may have a milder impact than a large, ongoing one.
- Context matters: Lenders often take into account the reason behind the problem. Redundancy, illness, or divorce can all trigger short-term financial strain.
The key message? Your credit history tells part of your story—but not all of it.
Can You Remortgage with Bad Credit?
In most cases, yes—you can. The options available will depend on the type and severity of your credit issues, the amount of equity in your home, and your current financial stability.
Mainstream banks tend to have strict, automated lending criteria. If you’ve had a CCJ or default in the last few years, they may decline your application automatically. However, there’s a large and growing market of specialist lenders who manually assess each case.
These lenders are more flexible. They focus on affordability today, not just your past mistakes. If you can demonstrate consistent income, stable employment, and responsible financial behaviour since your credit issues, your application stands a far better chance.
Why People Remortgage (Even with Bad Credit)
There are several reasons homeowners consider remortgaging, even when their credit file isn’t perfect.
- Securing a better rate: Once your current deal ends, you’ll likely move onto your lender’s standard variable rate, which can be much higher.
- Debt consolidation: Some borrowers use a remortgage to pay off multiple debts at higher interest rates.
- Home improvements: Unlocking equity for renovations can increase property value.
- Stabilising monthly payments: Switching to a fixed-rate deal can provide financial certainty.
It’s important to understand that while remortgaging can help manage debt, it may not be suitable for everyone. Consolidating unsecured debts into a mortgage means they become secured against your home, so repayments are critical.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
How Lenders Assess Your Application
When reviewing a remortgage application from someone with bad credit, lenders typically look at four main areas:
1. Your Current Financial Situation
Can you comfortably afford the new mortgage payments? Lenders will assess your income, regular outgoings, and existing commitments to ensure the new loan is sustainable.
2. Your Credit History
They’ll review your credit file from agencies such as Experian, Equifax, and TransUnion. Recent issues carry more weight than older ones.
3. Your Equity Position (Loan-to-Value, or LTV)
The more equity you have in your home, the better. A lower LTV means less risk for the lender and more chance of approval. For example, if you own 40 per cent of your home outright, you’re in a stronger position than someone with only 5 per cent equity.
4. Your Property and Purpose
Lenders consider whether you’re remortgaging to raise capital, consolidate debt, or simply change deals. The purpose affects their decision and the products available.
Improving Your Chances of Approval
Even if your credit history isn’t perfect, there are several steps you can take to make your remortgage application stronger.
1. Review and Repair Your Credit File
Before applying, request your credit reports from all three major agencies. Check for errors or outdated entries and have them corrected. Even something as simple as being registered on the electoral roll can make a difference.
2. Build a Track Record of Stability
Lenders want to see that you’ve regained control of your finances. Make all payments on time, avoid unnecessary borrowing, and keep your credit utilisation low.
3. Save a Larger Deposit or Build Equity
If you’re reducing your loan-to-value by overpaying your mortgage or adding extra capital, you’ll present as a lower-risk borrower.
4. Work with a Specialist Mortgage Broker
A broker who understands adverse credit can make all the difference. They’ll know which lenders are more sympathetic to your situation, and they’ll help you present your case clearly.
A broker can also prevent unnecessary credit searches, which can further damage your score if multiple applications are made.
Pros and Cons of Remortgaging with Bad Credit
| Advantages | Disadvantages |
| Access to better or more stable interest rates | May face higher rates than prime borrowers |
| Ability to consolidate debts | Risk of securing previously unsecured debts against your home |
| Opportunity to reset finances and improve credit | Some lenders may charge higher fees or require larger deposits |
| Builds a new track record of on-time payments | Limited choice of lenders compared with standard applicants |
The decision should never be rushed. It’s about finding the right balance between short-term relief and long-term cost.
Real-World Example
Imagine a homeowner named Sarah who took out a mortgage five years ago. Two years later, she lost her job and missed several credit card payments, resulting in a small default. Since then, she’s been back in stable employment and has managed her finances well.
Her fixed-rate deal is about to end, and she’s facing a jump to her lender’s variable rate. With the help of a specialist broker, Sarah finds a lender willing to consider her history. The new deal reduces her monthly payment and helps her avoid unnecessary financial strain.
This example shows that bad credit doesn’t have to define your future—it just requires the right guidance and preparation.
Common Misconceptions
- “I have bad credit, so I can’t remortgage.”
Not true. There are specialist lenders specifically designed to help in these circumstances. - “I need perfect credit to get a decent rate.”
While stronger credit can help, lenders weigh other factors like equity, income stability, and deposit size. - “All bad credit is treated the same.”
It isn’t. Lenders distinguish between types, amounts, and timing of issues.
When Remortgaging Might Not Be Right
Remortgaging isn’t always the best move. You should think twice if:
- You have very little equity in your property
- You’re currently in serious financial difficulty with no sustainable income
- Early repayment charges on your existing mortgage outweigh the potential savings
In such cases, it may be better to wait until your credit improves or to seek independent financial advice before committing.
Getting the Right Support
The process can feel daunting, especially when dealing with poor credit, but you don’t have to go through it alone. A qualified broker can help assess your eligibility, explain your options, and connect you with lenders that understand complex financial histories.
At Finance 4 Homes, we specialise in helping clients with less-than-perfect credit find realistic remortgage solutions. We focus on your current situation—not just your past.
We’ll:
- Assess your affordability and credit position
- Match you to lenders most likely to accept your application
- Handle the paperwork to make the process as smooth as possible
We may charge a fee for arranging your mortgage. A typical fee could be up to 1 per cent of the loan amount, depending on circumstances. Your actual fee will be confirmed before application.
Not all applicants with bad credit will qualify. Product availability, interest rates, and loan amounts depend on individual circumstances and lender criteria.
If you’re struggling with debt, free and impartial help is available from organisations such as MoneyHelper, StepChange, or Citizens Advice.
Finance 4 Homes Ltd | Appointed Representative of Beneficial Ltd (Authorised and Regulated by the Financial Conduct Authority – FCA 736655) | For UK consumers only | Registered in England No. [insert] | Last updated October 2025.
