Remortgage with bad credit: what are your options?

If you're planning to remortgage with bad credit, the first thing to understand is that lenders don't use a single definition of "bad credit" - what one lender views as a serious problem, another might barely blink at. Adverse credit generally covers missed payments, registered defaults, County Court Judgments (CCJs), active or discharged debt management plans (DMPs), Individual Voluntary Arrangements (IVAs), and historic bankruptcy.

Millions of UK adults have at least one adverse credit marker on their file, according to the Financial Conduct Authority's Financial Lives Survey. Having one doesn't automatically rule you out of a remortgage - it changes which lenders will consider you and what evidence they'll want to see.

Specialist lenders look at the type of credit event, how long ago it happened, whether it's been resolved, and its value relative to your income. A small default from several years ago is treated very differently to an unsatisfied CCJ registered last month.

Lenders price risk. If your credit file shows missed payments, defaults, or a CCJ, a lender is taking on more perceived risk than it would with a completely clean file - and that's typically reflected in the rate and terms on offer rather than in whether you're accepted at all.

How much of a difference this makes depends on several factors working together: the severity and age of the adverse credit, your loan-to-value, your income and affordability, and which specialist lender you approach. Two applicants with the same CCJ can be offered very different terms depending on their equity and overall financial picture.

Because rates and lender criteria change constantly, and every case is assessed individually, it isn't possible to give a meaningful figure here. An advisor can search current products from a wide range of lenders and give you an accurate picture based on your actual circumstances.

Once you understand where your credit file stands, there are broadly three routes homeowners with adverse credit can take. The right one depends on how recent your credit issue is, how much equity you have, and when your current deal ends.

Equity is one of the strongest compensating factors when you're trying to remortgage with bad credit. The more of your property you own outright, the more lenders are likely to consider your application - even with a difficult credit history.

Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it, so it's worth thinking carefully about how much you borrow against your equity, even where a specialist lender is willing to offer more.

If you're hoping to remortgage with bad credit specifically to pay off other borrowing, our guide to debt consolidation via remortgage covers how lenders assess consolidation cases. Homeowners looking at a different way to access equity, such as later in life, may also want to read about equity release for homeowners as an alternative route. If a remortgage doesn't work out, some homeowners also consider secured loans for bad credit as another way to borrow against their property.

Whether you're remortgaging now or waiting a few months, there are practical steps that can improve the range of lenders willing to consider you. Our wider guide to adverse credit mortgages explained covers this in more depth if you're looking at a first-time purchase alongside a remortgage decision.