Remortgaging with Bad Credit: What You Need to Know

Remortgaging with bad credit can be a difficult task, but it’s not impossible. Before embarking on the process, it’s important to understand what bad credit means and how it can affect your ability to remortgage.

In the context of mortgage lending, credit scores are used to evaluate an individual’s creditworthiness. A credit score is a numerical rating that takes into account a person’s credit history, including things like outstanding debts, payment history, and the types of credit accounts they have. A good credit score is typically considered to be around 700 or above, while a score below 600 is considered to be bad credit.

If you have bad credit, it can be more difficult to qualify for a new mortgage loan, and if you are approved, the interest rate and terms of the loan may be less favorable than they would be for someone with a good credit score. This is because lenders view individuals with bad credit as a higher risk, and they may be more likely to default on their loans.

Despite this, there are still options available for those looking to remortgage with bad credit. One option is to work with a specialist bad credit lender. These lenders are specifically set up to work with individuals who have poor credit, and they may be more willing to overlook some of the negative factors in your credit history.

Another option is to find a co-signer with a good credit score to cosign your mortgage loan. A co-signer is someone who shares the responsibility for paying back the loan with you, and having a good credit score can help to offset the risk of default. This can increase your chances of getting approved for a mortgage loan and also help you to secure a better interest rate.

It’s also important to note that some types of mortgages, such as government-backed FHA loans, may have more lenient credit requirements than conventional mortgages. Consider researching and consulting with professionals to see if any of them is appropriate to your situation, and can be a viable option to achieve your remortgaging goals.

Additionally, you may be able to improve your credit score before applying for a mortgage loan by making sure all of your bills are paid on time, paying off any outstanding debts, and keeping the amount of credit you use at a reasonable level.

It’s also a good idea to get pre-approved for a mortgage before you start looking for a new home. This will give you a better idea of what you can afford and what type of loan you might qualify for, so you can make sure that you’re looking at properties within your price range.

In summary, remortgaging with bad credit can be a difficult task, but it’s not impossible. It’s important to understand your credit score and what factors have led to your poor credit history. You should also be prepared to work with a specialist bad credit lender or find a cosigner, you can also consider government-backed loans and check if your qualify. Finally, it’s important to take steps to improve your credit score before applying for a mortgage loan, like paying off debts and keeping a good payment history.