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Can you remortgage with poor credit?
Homeowners and mortgage payers will at some point during their mortgage term want to remortgage, either to a better interest rate or to move to a new lender. When people have poor credit registered against them, the question is sometimes not who should I remortgage with, but is a remortgage available with poor credit?
There are remortgage products available that allow people to remortgage with poor credit but they differ slightly from the mortgage products a high street lender may offer.
One of the main differences is that the mortgage rates tend to be based on the LIBOR (London Inter Bank Offered Rate) instead of the bank of england base rate, this usually means the mortgage rates are slightly higher than high street lenders, reflecting the potential risk to the lender when offering mortgages to people with poor credit.
What sorts or poor credit are allowed?
Generally speaking re-mortgages that allow poor credit will allow the majority of poor credit to be registered on a persons credit file without impeding the remortgage application.
The effect the poor credit will have on the re-mortgages available will probably limit the loan to value (LTV), and often mortgage affordability is worked out slightly differently than high street lenders.
If you have only slight poor credit, possibly a few missed payments on a loan or maybe a few defaults registered against you then its likely you will be limited to around 85% LTV, its unlikely any lender that allows poor credit will lend more than this when considering a remortgage, although they may consider more when considering a new mortgage (purchase).
If you have CCJ's registered against you then you will more than likely be limited to around 80% LTV, although there are products available that will allow you to borrow 85% of the property value with CCJ's, the CCJ's allowed would be very minimal - possibly only a couple of hundred pounds maximum.
For existing mortgage arrears, say 1 or 2 missed payments you will more than likely be restricted to 80% loan to value, if you have more than 2 missed mortgage payments within the last 12 months (a lender will typically look at the last 12 months mortgage payments) its likely you will be restricted to either 75%, 70% or possibly even 65% LTV depending on how many missed payments you have.
Whilst this may seem fairly straight forward, the majority of lenders allow a variety of poor credit items, for instance, a mortgage product could allow 2 defaults, 1CCJ and 1 missed mortgage payment for remortgage's up to 80% loan to value - for this reason most people will speak to a professional, specialist mortgage broker.
