​How to remortgage with bad credit (and get better rates)

Looking to get your monthly mortgage payments a bit cheaper? Whether your current deal is ending or you’re looking for a better one, it is possible to remortgage your property (even if you have bad credit). 

The key to getting better rates when remortgaging is working with the right lenders for you, understanding your credit report and preparing your application properly. 

Remortgaging can save you thousands when the situation is right. But it’s really important to understand how refinancing your home loan works, why you might want to take the leap, and how your credit is connected to the decisions you make. 

Here are the key things to consider when it comes to remortgaging, whether your credit score is higher or lower:

• Yes, you can remortgage with bad credit, but your options and interest rates will depend on your financial situation and preparation
  

• Improving your credit score before applying can help you access better remortgage deals and lower rates
  

• Understanding your credit report and exploring the right lenders can increase your chances of approval
  

• Consistent, positive financial habits (and a Loqbox membership) can help you build your credit and unlock better options over time
  

Improvements to your credit score are not guaranteed.

What does remortgaging mean?

Remortgaging is essentially paying off your old mortgage with a new one, using your property as security. There are lots of reasons why you might remortgage, such as moving house, ending a fixed-term agreement, or looking for a better deal. 

You can usually remortgage at any point during your mortgage term, but early repayment charges may apply.

When you first organised your mortgage, it would have come with terms such as how much you agreed to borrow, how many years it would take to repay it, and how much interest you would pay on that loan. When you remortgage, you can change the terms of your agreement and possibly get a better deal.‍

‍Refinancing your mortgage doesn’t always mean you have to find a new mortgage provider. Depending on how happy you are with their offers, the best deal could be with your current lender, but consider these key things:

• Whether you have to cover an early repayment fee
  

• What the current interest rates are

It’s worthwhile considering all of the elements of your mortgage to make the most of your future finances.

How to remortgage with bad credit

Yes, if you’ve checked your credit score and it’s listed as “bad” or “poor” you can still remortgage. If your credit score isn’t where you want it to be yet, your options may be more limited, but you’ve still got routes to explore. The process may be tougher and interest rates less competitive, which can feel frustrating, but it’s something you can improve over time. Here’s what you can do:

Explore mortgage options if you have bad credit

There are special mortgage agreements which lenders offer to people with poor credit, so if that’s you, you’ve got options. However, here are a few things to be mindful of with these kinds of deals:

• You might not be able to borrow as much money

• You might need a bigger deposit

• The interest rates will likely be higher

This is your opportunity to plan ahead and make sure you improve your credit as much as possible before you apply to remortgage.

Build your credit score before remortgaging

To build a healthy credit score, lenders want to see responsible repayments on any loans/credit you have, paid in full and on time. Making sure you meet all your agreed-upon terms on your current mortgage is a strong signal to lenders and a fantastic way to improve your credit. Plus, it’s one of the most important loans you’ll ever take out, so try to stay consistent. 

Joining Loqbox can help you build your credit and show lenders you can manage repayments. It could be a great move forward when you’re preparing to remortgage as it could give you a higher chance of approval and better rates. 

Find out how it works here.‍

‍Improvements to your credit score are not guaranteed.

What's the connection between mortgage rates and credit scores?

Your credit history lets potential lenders know how responsible you are with borrowing money. When you apply to refinance your mortgage, the lender will do a hard credit check to see your history and decide what kind of mortgage rate they’ll give you. This is why it’s important to get your credit report (and in turn, your score) into a good place for remortgaging.

‍If you want to discover more about what credit score you need to buy a property, you can head to our guide here.

‍Let’s take a look at two main remortgaging options that can have a big impact on your credit and remortgage rates:

Staying with the same provider on the same deal

If you just want to stick with your current provider with limited changes to how much money you borrow, your lender may decide they don’t need to do another credit check. This means you likely won’t have to worry about your score this time around. If you do have bad credit, though, it’s still a good idea to keep working on improving it anyway. Future you will thank you.

Switching to a new provider or changing mortgage

If you stay with your current provider, but you choose to change your mortgage and pay more per month, that could trigger a credit and affordability check. The new terms of your mortgage would represent a new risk, so the lender needs to make sure that you’re in a position to make your repayments. 

‍If you switch to a new mortgage provider altogether, your application will work in the same way as when you first applied for a mortgage. That’s because the new lender will not know how creditworthy you are until they look at your credit history.

What is a good credit score for refinancing a mortgage?

There’s no specific “good” number that will guarantee your application to remortgage will be accepted. But generally, the higher your credit score, the better chance you’ll have of getting a favourable deal. The table below breaks it down for you:

The table above is for illustrative purposes only. It shows an example of how credit ratings can influence the interest rates lenders may offer on a mortgage. The figures do not guarantee the rate or savings you will receive. Rates vary significantly between lenders, are subject to change, and the difference between credit rating bands depends on individual circumstances.
‍

The rules are the same for your first mortgage. You can learn more about what credit score you need to get a mortgage in this guide.

Why might I choose to remortgage?

There are a few reasons why you might choose to remortgage:

Remortgaging for a better loan-to-value ratio

Remortgaging can sometimes get you a better ‘loan-to-value’ (LTV) on your current deal. An LTV is a simple way of showing how much you’re borrowing compared to the value of your property. It’s calculated by dividing what you are borrowing or want to borrow by the value of your house, and expressed as a percentage. 

If you’re remortgaging with a lower LTV you may well find that you have more choice and better deals available to you. This is because you are borrowing less compared to what your home is worth which makes you less risky to lenders.

Remortgaging for better interest rates

Another common reason to remortgage is to get better rates. If your one, two or five-year fixed-rate mortgage comes to an end, and you do nothing, you’ll often be moved onto your provider’s “standard variable rates”. Standard variable rates are very often higher than initial mortgage deals, and they can go up and down over time. So you may want to explore a better deal either with your current provider or a new one.

Remortgaging to fund home improvements or consolidate debt

You may also be thinking about increasing your mortgage. Perhaps you want to do some repairs to your house or consolidate your debts. This can be appealing as mortgage interest rates are lower than those of many credit cards and loans, but the length of the borrowing term can often make the total amount for repayment more expensive. You might find that other options, such as a home improvement loan, are cheaper in the long run.

Does refinancing hurt your credit?

Remortgaging can affect your credit score slightly, but it’s often a small impact and shouldn’t last too long. If you apply to a new mortgage provider or if you change the terms of your mortgage with your current provider, they may do a hard credit check on you. This can lower your credit score but the impact is usually small and temporary.

But don’t worry, if you keep making your repayments in full and on time, then your credit score should soon go back up. Being patient and waiting a while before reapplying could help you benefit from a better deal in the long run.

What if my application gets declined?

If you’re declined when you apply for a remortgage, avoid reapplying too soon. When you apply for lots of credit in a short period, it can impact your credit score further. 

‍If you find yourself in this situation, it’s a good idea to speak to your current mortgage provider about what options might be available, or seek professional advice from a mortgage advisor.

How to improve your credit to remortgage your home

To improve your chances of remortgaging, focus on building a strong track record of managing money well.

‍If you switch lenders or move to a new deal, you’ll usually be credit checked. A higher credit score can make it easier to get approved and help you access better mortgage rates, which could save you money over time.

You can build your credit by staying consistent with payments, keeping borrowing manageable, and showing reliable financial habits. Tools like Loqbox can support this by helping you build a history of regular payments while you save. This gives you a stronger profile, more options, and more confidence so when the time comes, you’ll be in control of your next move. 

Improvements to your credit score are not guaranteed.