Remortgaging with bad credit

Remortgaging with bad credit is possible, but the route depends on how recent and how serious the issues are. Specialist lenders assess missed payments, defaults and CCJs case by case, looking at how old they are, whether they're settled, and the story behind them. A lower loan-to-value and a clean recent record both help. For contractors, the usual income challenge sits on top, so the right lender needs to handle both the credit profile and the contract income.

Can you remortgage with bad credit?

Answer first: often yes — but the terms depend on how recent and how serious the credit issues are. A single old, settled blemish is very different from several recent defaults, and lenders treat them accordingly. Specialist lenders assess adverse credit case by case, weighing the age, size, settlement status and context of each issue rather than applying a blanket no.

So “bad credit” isn’t one thing. A late payment two years ago barely registers; a recent CCJ for a meaningful sum is a bigger hurdle. The realistic question isn’t whether you can remortgage, but which lenders will consider your specific profile and on what terms. The general process is in how to remortgage; this guide is about navigating it with credit issues.

How do lenders weigh credit issues?

Lenders look at several things about each mark on your file:

How recent it is. Time heals credit problems — an issue from several years ago, with a clean record since, carries far less weight than a recent one.

How serious it is. A missed payment is minor; a default is more significant; a CCJ or anything more serious is weightier still, and the amount matters too.

Whether it’s settled. A satisfied default or CCJ reassures a lender far more than an outstanding one, because it shows the matter is resolved.

The story behind it. A one-off problem tied to a clear, past event (illness, a relationship breakdown, a single business setback) followed by recovery is viewed very differently from a pattern of ongoing difficulty.

A specialist lender weighs all of this together. That’s why two people with “bad credit” can get completely different answers — the detail is everything.

How does equity change your options?

A lot. Your loan-to-value is one of the strongest levers you have. The more equity you hold, the lower the lender’s risk, which widens the range of lenders willing to consider you and improves the rate on offer. If you’ve built up equity since you bought — through repayments or rising prices — a remortgage at a modest loan-to-value can be achievable with a credit history that would block a high-loan-to-value case.

So even where your credit profile is imperfect, strong equity can carry the case. It’s one reason it’s worth checking your position rather than assuming adverse credit rules out a remortgage — the equity side of the equation may be doing more for you than you realise.

What can you do to improve your chances?

A few things genuinely help before you apply. Check your credit file with the main agencies and correct any errors — mistakes are common and fixable. Settle what you can, since satisfied markers are viewed more kindly than outstanding ones. Build a clean recent record, because lenders care most about the last year or two. And avoid multiple hard searches, which is exactly where a broker helps: rather than you applying and being declined repeatedly, a broker matches you to a lender likely to accept your profile first time.

None of this erases history, but it strengthens how your case reads — and on a borderline application, that framing can be the difference between an approval and a decline.

How does this work for contractors?

A contractor with credit issues has a two-part case: the credit profile and the contract income. You need a lender that both accepts the credit history and reads your day rate properly through contract-based underwriting — and the overlap of lenders comfortable with both is narrower than for either alone.

That’s precisely where whole-of-market advice matters most. Placing a case that has to clear two hurdles at once — adverse credit and contract income — is harder to do by guesswork, and a wrong application means a hard search and a decline on the record. A broker who knows which lenders accept both gives the case its best chance in one go.

The bottom line

Remortgaging with bad credit is often possible; the terms hinge on how recent and serious the issues are, how much equity you hold, and how clean your recent record is. Specialist lenders judge each case individually, so old, settled, isolated issues are very workable, while recent or serious ones narrow the field to specialist lenders at higher rates. For contractors, the right lender must handle both the credit profile and the income. To find a lender suited to your exact situation, speak to an adviser. For free, impartial help with credit and debt, MoneyHelper is a good neutral resource.