Remortgaging with Bad Credit : Best Practices 2025

Having bad credit does not mean you cannot remortgage. While it can make the process more challenging, there are specialist lenders who are willing to consider applicants with credit issues, and with the right advice, you can still find a competitive deal. This guide explains everything you need to know about remortgaging with bad credit in 2025, including which credit issues lenders consider and how to improve your chances of approval.

At Option Finance, we have extensive experience helping clients with adverse credit secure remortgage deals. We understand that credit problems can happen to anyone and are rarely the full picture of someone’s financial situation.

What counts as bad credit?

Bad credit is a broad term that covers a range of issues on your credit file. Lenders assess each type of credit problem differently, and the severity, age, and amount involved all influence their decision. Common credit issues include:

• Late payments — missed or late payments on credit cards, loans, or existing mortgages. The more recent and frequent these are, the more seriously lenders view them. Read our getting a mortgage after late payments guide.
• Defaults — when a creditor formally records that you have failed to repay a debt. Defaults remain on your credit file for 6 years from the date of default. See our mortgage with a default guide.
• County Court Judgments (CCJs) — a court order issued when you fail to repay a debt. Like defaults, CCJs stay on your file for 6 years. Satisfied CCJs (those you have paid) are viewed more favourably than unsatisfied ones. Our getting a mortgage with a CCJ guide has full details.
• Individual Voluntary Arrangements (IVAs) — a formal agreement with creditors to repay debts over a set period, usually 5-6 years. IVAs are a significant credit event but can still be worked around by specialist lenders.
• Bankruptcy — the most serious credit issue. Most mainstream lenders will not consider applicants who have been bankrupt, but specialist lenders may do so once you have been discharged for a certain period (typically 3-6 years).
• Debt Management Plans (DMPs) — informal arrangements to repay debts at a reduced rate. These are less severe than IVAs but still flag to lenders that you have had difficulty managing credit.
• Low credit score — even without specific adverse events, a thin credit file or low score can affect your options.

The key factors lenders consider are how recent the issues are, how much was involved, and whether they have been resolved (satisfied). A small, satisfied default from 5 years ago will be treated very differently from a large, unsatisfied CCJ from last year.

Can you actually remortgage with bad credit?

Yes, you can. The UK mortgage market includes a range of specialist lenders who cater specifically to borrowers with credit issues. These lenders use manual underwriting rather than purely automated credit scoring, which means a real person reviews your application and considers the full context of your situation.

However, there are some important realities to be aware of:

• Interest rates will likely be higher — specialist lenders charge more to reflect the increased risk they take on. You should expect to pay 1-3% more than the best high-street rates, depending on the nature of your credit issues.
• Fees may be higher — some specialist deals come with higher arrangement fees.
• Your LTV may be limited — lenders may cap how much they will lend relative to your property’s value. Where a mainstream lender might offer 90% LTV, a specialist lender may limit you to 75% or 80%.
• Product choice is narrower — you may have fewer deals to choose from, but there are still competitive options within the specialist market.

The important thing is that options exist. Falling onto your current lender’s standard variable rate (SVR) because you assume no one will lend to you could cost you hundreds of pounds a month unnecessarily.

How your credit history affects the rates you are offered

Different credit issues carry different weight with lenders. Here is a general guide to how common credit problems affect the rates available to you:

Minor issues (smallest rate impact):

• One or two late payments more than 12 months ago
• A satisfied default over 3 years old
• A small CCJ (under £500) that has been satisfied

Moderate issues (moderate rate impact):

• Multiple late payments in the last 12-24 months
• An unsatisfied default
• A satisfied CCJ in the last 2-3 years
• A completed DMP

Severe issues (significant rate impact):

• Missed mortgage payments (these are treated more seriously than missed credit card payments)
• An IVA (active or recently completed)
• Multiple CCJs or defaults
• Bankruptcy discharge within the last 3-6 years

Even with severe issues, remortgaging is not impossible — it simply requires a specialist approach. Our team at Option Finance knows which lenders are most likely to consider your specific circumstances, which saves you the time and potential credit damage of applying to the wrong lenders.

Steps to improve your chances

While you cannot erase your credit history overnight, there are practical steps you can take to strengthen your remortgage application:

1. Check your credit report for errors

Obtain your credit reports from all three UK credit reference agencies — Experian, Equifax, and TransUnion. Check every entry carefully and dispute any errors. Common mistakes include debts that have been paid but not marked as satisfied, addresses that are incorrect, and accounts that do not belong to you. Correcting errors can improve your score quickly.

2. Register on the electoral roll

Being on the electoral roll at your current address is one of the simplest ways to improve your credit profile. It helps lenders verify your identity and address.

3. Reduce existing debt

Paying down outstanding debts, particularly credit cards and overdrafts, improves your debt-to-income ratio and demonstrates financial stability. Focus on high-interest debts first.

4. Make all current payments on time

Consistent, on-time payments on all your existing credit commitments — including your current mortgage — build a positive recent payment history. Even 6-12 months of clean payments can make a meaningful difference to how lenders view your application.

5. Avoid new credit applications

Each credit application leaves a “hard search” footprint on your file. Multiple applications in a short period can signal financial difficulty to lenders. Avoid applying for new credit cards, loans, or finance agreements in the months leading up to your remortgage application.

6. Wait if you can

Credit issues have less impact the older they get. If your current mortgage rate is not too expensive and your credit issues are relatively recent, waiting 6-12 months before remortgaging could unlock better deals.

Our affordability calculator can help you understand how your current debts and income affect what lenders might offer you.

Product transfers as an alternative

If your credit issues make remortgaging with a new lender difficult, a product transfer with your existing lender could be a viable alternative. A product transfer allows you to switch to a new rate without leaving your current lender.

The advantages of a product transfer when you have bad credit include:

• No new affordability assessment in many cases — your lender already knows your payment history with them.
• No credit check with some lenders — since you are staying with the same provider, they may not run a full credit search.
• No valuation required — saving you both time and potential costs.
• No legal work needed — the mortgage charge does not transfer, so there are no conveyancing costs.

The downside is that you are limited to the rates your current lender offers, which may not be the most competitive on the market. At Option Finance, we always compare product transfer options against remortgage deals from other lenders to ensure you are getting the best outcome for your situation. Read our remortgaging vs product transfer guide for a detailed comparison.

Working with a specialist broker

Navigating the remortgage market with bad credit is significantly easier with a specialist broker. Here is why:

• Knowledge of specialist lenders — we know which lenders are most likely to accept your specific credit profile, avoiding wasted applications.
• Manual submission — many specialist deals require the application to be manually submitted with a detailed explanation of your credit history. We prepare these submissions to present your case in the best possible light.
• Whole-of-market access — we compare deals from mainstream and specialist lenders to find the best option for your circumstances.
• Credit file protection — by identifying the right lenders before applying, we minimise the number of hard searches on your file.

The FCA requires all mortgage advisers to act in their clients’ best interests and to recommend suitable products. At Option Finance, we take this responsibility seriously, particularly when working with clients who have had credit difficulties.

If you are looking at other options alongside remortgaging, our guides on buy-to-let mortgages and first-time buyer mortgages also cover how credit issues affect those applications.

What documentation you will need

When applying to remortgage with bad credit, lenders typically require more detailed documentation than for a standard application. Be prepared to provide:

• A full credit report — your broker can help you obtain and review this.
• Explanation letters — for each credit issue, lenders like to see a brief written explanation of what happened and what has changed since. For example, “The CCJ in 2022 resulted from a billing dispute with a utility company. It was satisfied in full in January 2023.”
• Proof of satisfaction — for any defaults or CCJs that have been paid, provide certificates of satisfaction.
• Bank statements — usually 3-6 months, showing your current income and expenditure.
• Payslips and P60 — or SA302 tax returns if you are self-employed.
• Current mortgage statement — showing your balance, payment history, and any arrears.

Having this documentation ready before you apply speeds up the process considerably and demonstrates to lenders that you are organised and proactive about your finances.

Common myths about remortgaging with bad credit

Myth: You cannot remortgage until all credit issues are 6 years old. Reality: Many specialist lenders will consider applications with recent credit issues. The rates may be higher, but you do not have to wait 6 years.

Myth: Using a broker costs more. Reality: Brokers have access to exclusive deals and specialist lenders that you cannot approach directly. The savings they find typically outweigh any broker fee.

Myth: Your current lender will automatically reject you. Reality: Your current lender already has your payment history. If you have been making your mortgage payments on time, they may be willing to offer a product transfer regardless of other credit issues.

Myth: One application rejection ruins your chances. Reality: While multiple rejections are harmful, a single declined application does not prevent you from applying elsewhere. The key is to apply to the right lender the first time — which is where a broker adds real value.

Use our repayment calculator to see how different interest rates affect your monthly payments, so you know what to expect from specialist deals.

Planning your remortgage timeline

If you have bad credit and your current deal is approaching its end, here is a suggested timeline:

6 months before deal expires:

• Check your credit reports with all three agencies
• Dispute any errors
• Begin making all payments on time if you have not been already
• Register on the electoral roll if not already registered

4-5 months before:

• Speak to a specialist broker like Option Finance
• Gather documentation
• Get a preliminary assessment of your options

3-4 months before:

• Submit your remortgage application through your broker
• Provide all supporting documentation promptly

1-2 months before:

• Valuation completed
• Legal work underway
• Mortgage offer issued

Deal expiry date:

• New mortgage completes
• Avoid falling onto the SVR

This timeline gives you plenty of buffer for any delays, which are more common with specialist applications.

Take the first step

Bad credit does not have to mean bad mortgage options. With specialist lenders, whole-of-market brokers, and a proactive approach to your application, remortgaging with credit issues is achievable. The key is getting expert advice early and applying to the right lenders. Use our remortgage calculator to compare your current rate with potential new rates.

At Option Finance, we specialise in helping clients with all types of credit issues find remortgage deals that work for their circumstances. We treat every client with respect and discretion, and we understand that credit problems are often the result of circumstances beyond your control.

Contact our team today for a free, confidential remortgage review. We will assess your credit situation, search the whole market for suitable deals, and guide you through every step of the process. Your credit history is just one part of your story — let us help you find the right way forward.