Bad Credit Remortgages - CCJs, IVAs, Defaults Accepted
We make finding an adverse remortgage easy. Financing options are available for all situations.
Remortgage interest rates from 1.53% fixed for at least two years. From January 2021 - We have 5 new lenders for a poor credit remortgage products.
Offers are limited, so please complete our short form with your details. As demand increases the lender’s criteria will start to get more strict.
There’s only one barrier that’s going to block your success in the bad credit remortgaging process. That’s affordability. If you can prove you can afford the repayments on any loan, then it’s only a question of which lender is most suited to approve your loan.
If you know you can afford the repayments, you then see that you can get a remortgage approved with many types of bad credit entries on your reports. It’s only the entries that are assessed. Not the score that the credit reference agencies assign to your report.
Can I refinance my mortgage with a bad credit mortgage?
You can because there are two types of lenders. The most common are your bank as they’ve got nearly every financial product you can imagine… so it’s the logical place to apply – to the company you do your day to day banking with. The other type of lender is those whose sole business is risk-based. While the banks on the high street are popular, the secondary market isn’t so much. In the finance sector, these lenders are known as subprime lenders.
Think of them like this:
- Prime – Lenders suitable for applicants with a decent to excellent credit report
- Subprime – For all applicants with negative entries on their credit report
The entire credit sector is split into those categories. It doesn’t matter if you need a credit card, secured or unsecured loan, or store finance to buy a new washing machine on credit. When you need to borrow or obtain goods through a finance agreement, you’ll get funding approved from one of those two types of lenders, the mainstream (prime) lenders or a subprime lender.
There’s a variety of adverse credit remortgage lenders, and all of them vary with what they consider to be risky borrowers. Too risky for one lender could be another lender’s perfect customer. That’s where brokers come into the equation as they have the experience and knowledge of what each lender considers to be too risky and identify the company (and often more than the one lender) that’d be most likely to approve on the loan. It depends on the severity of entries on your credit report.
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Is it possible to refinance with bad credit and late payments showing?
Any recent late payments are going to indicate to lenders you’re high risk because you can’t meet your current payment deadlines. As such, your choice of lenders will narrow. It doesn’t rule you out of the remortgage process. It just reflects a need to prove you’re making efforts to get your finances under control—one of these being an adequately prepared budget, which there’s further information about below.
I'm worried my debts are too high to be accepted for any bad credit remortgage
Every lender will always assess your affordability for finance. You will not be approved for a secured home loan if your current financial circumstances indicate you wouldn’t be able to afford the repayments. Rest assured, if you’re accepted, you will be able to afford to borrow at the rates presented. And lenders will not charge you based on what they assess you to be able to afford.
They’ll provide a conditional offer based on your risk level. You are only approved for affordability. Your household income doesn’t affect your interest rate. Just risk, and that’s assessed using the information presented on your credit files. There are other factors to consider, such as the term of the loan when you plan to retire if you intend to pay your kids university fees etc.
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Some people may feel like they’re drowning in debt, especially when there’s not much disposable income left at the month-end
To be considered as maxed out on your available credit, you’d be spending over 36% of your current monthly income on debts. A hypothetical example is someone with a £24,000 salary, which is roughly a monthly income of £2,000 (before tax and NI) and spending upwards of £720 per month towards debt repayments. Such a scenario could happen following a relationship breakup resulting in a remortgage being required based on a sole income, rather than a joint household income.
If that were to be the case, you’d need to bring your debt repayments down. Not repay the debts in full. Remortgaging with bad credit is usually done to pay your monthly debt repayments down as it’s often unsecured debts on a high interest that move onto secured debts with lower interest.
To work out if you can realistically afford to remortgage, it’s not as simple as finding a remortgage bad credit calculator online, punching in some numbers and hitting calculate. It’s best to do a complete and thorough budget assessment, so you know where you’re currently spending. This is always going to be the case with debts and the first thing you’ll do with any debt advice service.
Prepare a budget
That’s a real budget and not a monthly planner. A tool you can use instead of any mortgage calculator is this budgeting tool: http://www.stoozing.com/calculator/soa.php
It’s a “Statement of Affairs” tool that takes into account a wide variety of expenditure. It’s going to help you get all of your figures collated together, ready for an adverse credit mortgage advisor to help you work things out, or work with a debt advisory service.
Once you’ve used it for your calculations, print a copy of it out as it’ll help you in the application stages. It’s quite a comprehensive budgeting tool, so will go a long way towards helping you and any advisor you work with to understand your actual financial position. If you’d prefer to remain anonymous and not submit personal financial details online, simply take a note of all the expenses listed, and complete it with pen and paper.
The more details you have accounted for in your expenditure, the more lenders have to help with their risk assessment, and for that part, more details are always better. Whether you need to remortgage with bad credit and arrears, or if it’s minor late payments or missed payments on a secured loan, there are lenders available to cater to a wide variety of refinancing options.
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Whatever Financial Situation You Find Yourself In We Have The Experience And The Expertise To Assist You In Finding The Right Adverse Remortgage Product. Get In Contact With Jubilee And We’ll Do Our Best To Make Sure The Outcome Always Works Out In Your Favour.
Other Things To Consider In The Next 12 Months
The BoE’s Financial Policy Committee (FPC) recently released the June Financial Stability Report. After distilling the contents, reviewing the material and seeing the actions proposed, there are some key insights you should know about the direction that lenders are expected to be taking. That direction is to edge on the side of caution, because the FPC issued banks with a warning, meaning they need to be more cautious with risky borrowers.
And to make sure they got the message they did the logical thing and demanded banks pay £5.7bn in the next six months with a further £5.7bn by the end of next year, a total of £11.4 Billion payable in the next 18 months.
That’s the bank’s problem, and there’s nothing in the report suggesting anything of an impact on consumer interest rates or that will affect customers directly or indirectly, at least in the short-term.
What there is though are seven interesting points raised that’s worth bearing in mind about lenders before submitting a mortgage application.
- Risky borrowing will be stricter - specialised mortgage providers show their bad credit faqs
This is the obvious one. The FPC is concerned that banks are being complacent when taking on risky customers. It’s been seen with an increase of available adverse mortgage products, but of more concern to regulators is the number of approved bad credit mortgages that would be considered risky and probably better approved by a specialist lender rather than being provided as a standard mortgage with some changes.
It’s likely to get tougher to get approved by a bank for a mortgage when you have adverse credit. Nothing new, but for a small-time there, some banks were approving.
- Balloon payments on car finance will be viewed as risky
The report revealed that 15% of borrowing is in car finance. The worrying aspect is that the vehicles are purchased under a Personal Contract Purchase (PCP). It’s a type of short-term funding similar to hire purchase. At the end of the lease term, you can either pay a lump sum to buy the car, or the dealership will repurchase it from you. If you buy the vehicle, it’s a balloon payment, and if you sell it back, the vehicle’s depreciated, so there’s a risk you’re going to be liable for a high fee anyway.
If you have a PCP in place, lenders may start asking questions about how you intend to repay it at the end of the term. It’s not a requirement, but it’s a possibility so prepare for that before you apply.
- Home loans for property extensions account for 10% of consumer borrowing
10% of homeowners have taken advantage of the low-interest rates to take out finance to upgrade their homes, often by extending the property rather than moving to a larger and more expensive property. The banks are failing to take into account the risk of interest rates rising.
The BoE is worried that lenders are taking on more high-risk customers while failing to take into account future increases in market rates, which will affect a consumer’s ability to repay the secured loan. The interest rate is only lowered temporarily, and it will rise in the future. It’s only a question of when. Low-interest rates make it more likely that people will be vulnerable to interest rate increases when that time comes. That’s why fixed-term mortgage rates are appealing just now.
- Credit cards account for 10% of consumer borrowing
Credit cards were mentioned, and the stats show that they account for 10% of consumer borrowing. It doesn’t state how much per person but just know that if you have high credit card debts, you’ll likely be asked how much you pay towards it. Paying the minimum is never a good idea because that’s interest only and nothing to your capital. Lenders don’t like that so if you’ve got a credit card balance, ensure you can afford to pay more towards clearing it and preferably have a date set for when you expect it to be cleared.
- Brexit and COVID-19 raises eyebrows
Coronavirus and Brexit tops the list of uncertainty. Lenders can risk assessing borrowers ‘til the cows come home, but they cannot evaluate the impact of Brexit or the COVID Pandemic. The only thing they can do is hyperventilate and evaluate a worst-case scenario, one of those being to leave with no deal.
Resilience is the keyword for the Financial Planning Committee. They want to ensure the banks and the UK financial market, including insurance firms, is robust enough to withstand any adverse shock to the finance market. Adverse effects could ripple across the economy, resulting in higher interest rates and possibly impede house prices, which will impact on remortgage deals due to lower equity in the home.
- Rates are low, and you can stress test yourself with different lenders
According to MoneyFacts.co.uk, the standard rate for an adverse credit mortgage on a two-year fixed-term deal is 4.39%. That’s 2.12% higher than a conventional mortgage. Because of that, when you’re planning for a mortgage, your worst-case scenario would be a dent in your credit records which you can account for by making sure you can afford mortgage repayments if they increased by 3%.
This interest cushion in your financial planning when applying for a mortgage not only helps you to account for a possible interest rate increase at the end of a fixed term. But also in the event of an unexpected financial situation, such as an adverse credit report increasing your risk level, subsequently seeing you in need of a higher rate lender.
- More fixed rate adverse credit remortgages are available with a good property value
Money Facts revealed in June that there were 694 poor credit mortgage products available across the market. That was a 167 increase from March 2017 when there were 527 mortgages available for people with bad credit. Just stay away from any late payments and get a no obligation chat with expert advisers.
As with anything, when there’s more supply, the rates become more competitive. That’s what is happening just now, but with the FCA issuing the warning to banks, it remains to be seen if the products available will diminish or if it’s speciality lenders that will increase their mortgage product offerings.
For the moment, the only suggestion is that banks will get more cautious and when that happens, it’s often reflected in higher interest rates. There are too many people that have been affected by bad credit in the past, that future lending can’t afford not to consider bad credit applicants.
That’s why there are hundreds of products available, and those are only the standard products for borrowers with adverse credit. There are even more deals on offer with specialist lenders that can tailor products to meet your exact requirements.
A remortgage with bad credit - what about my credit rating?
With adverse credit history, the lender assumes they just have to have a bigger department of people making outgoing phone calls chasing people for the mortgage payments.
What the poor credit history lender really cares about is your ability to service your mortgage payments.
It is very important even if you already have bad credit history you never get into mortgage arrears. This will make your low credit score even lower.
The specialist lenders bad credit remortgage rates will go up and down depending on their risk appetite and economic outlook.
It's good to keep an eye on you credit file and your number of ccjs by having accounts with each credit reference agency. Sometimes one credit file will have different data in them and see your poor credit rating in a different way.
Bad credit remortgage lenders may just use one of the main credit reference agencies so finding out in advance which one they use could be very helpful.
With a poor credit score, bad credit remortgages are very accessible by using a mortgage broker even if your on a debt management plan.
Mortgage brokers will look carefully at your credit record, debt to income ration and existing bill payments on existing debts to make sure your bad credit remortgage application has an affordable mortgage payment.
Its much better for the mortgage advice consultant you study your bad credit rating before the mad credit mortgage lender do, as this could save you from the specialist bad credit lenders rejecting your application.
High street lenders will very rarely touch people with debt management plans, poor credit reports, an existing mortgage in arrears or other financial difficulties.
Sometimes you can explain away an adverse credit event with a notice of correction when an adverse remortgage lender will take a view on your individual circumstances and debt to income ratio. The lower your loan to value ratio the better.
Bad credit score mortgage deals could involve a broker fee where the broker knows the lending criteria well and the specifics of your credit issues.
Mortgage lenders that offer the best bad credit remortgage deals are also more likely to require a more in-depth valuation or survey and this will have a bearing on how much equity you can release.
It can take six years to get your clean credit back completely but the important thing is most people can get financial advice based on the UK credit ratings you have now - while considering your other debts.
Most people with a late or missed payment history will be frozen out of the high street bank mortgage market especially if they rely on an adverse specific credit card.
If you have these circumstances a specialist mortgage broker with an up to date knowledge of poor credit remortgages and pick the right lender for you and your low credit scores. The best remortgage deals will likely be unavailable to you.
It's easy to spot the people that manage money poorly because there will be evidence of payday loans, outstanding debts and credit agreements close to their credit limit and maybe arrears with the current mortgage provider (missed monthly payments).
The lower your LTV the more likely mainstream high street lenders will consider you are a responsible borrower?
Some of the best standard remortgage offers require a loan to value of 60% maximum.
In addition, very low monthly expenses shows a good financial status. For bad credit remortgages most lenders like to see a loan to value of 70% or less.
If your current mortgage balance is low, and your current mortgage has a low discounted rate a new mortgage maybe a bad idea. If you want to release equity, secured loans can be the best deal not a bad credit remortgage UK. Debt secured on your home can enable people with credit problems to raise cash outside the mainstream lenders at rates and terms that are reasonable. 2nd mortgages can sometimes have a higher interest rate than a different lender or your first lender.
If you have never had financial problems with your existing lender you maybe able to ask them for a further advice without an arrangement fee. They still may want to do an affordability test to see if you can afford the repayments, but your maybe spared from high interest rates if your loan to value LTV is not high.
Bad credit mortgage rates VS adverse credit rating secured loan lenders rates?
Generally bad credit mortgage rates are lower than bad credit secured loan rates, but the credit check with the credit agency may be more tolerant of other poor credit issues and payment defaults.
An impartial mortgage broker well tell you more about mortgage terms and your loan to income score. Lenders tend to haircut your property value due to the perceived risk of a credit crunch during the term you will have the second charge mortgage or bad credit remortgage.
I will have a clean credit history in 18 months time - should I wait and get a suitable lender then with a better mortgage offer?
Maybe, yes, depending on what deals the many specialist lenders will do now with our past financial trouble. A whole of market broker with a long history of financial management will establish a care for you to switch mortgage or not based on lender criteria on a case by case basis.
If you have arrears on your existing bad credit remortgage is unlikely even specialist lenders will even consider starting poor credit remortgage applications.
If you can't improve your credit score the potential lenders for releasing equity will be much smaller with a higher chance of getting a positive lending decision because you don't meet the relevant criteria or your properties value is to low.