When it comes to remortgaging with bad credit, we understand people are going to have questions. After all, it’s not like it’s something you planned for.
On this page, there’s a range of our most frequently asked questions about remortgaging. From what it involves, if deposits are required, the likely fees, how your home is valued and much more.
Have a read and get to know what’s involved. Should you have any questions remain unanswered, or you aren’t quite sure of anything, scroll back to the top of the page and use the “Contact Us” tab, click that and send us a message.
It depends on your reasons for raising the capital. A common reason people remortgage is for debt consolidation.
By transferring short term debts into one long-term debt, it can cut the cost of your monthly payments. But by paying for longer, you may wind up paying more interest.
Other situations are for home improvements, such as a kitchen makeover, fitting a bedroom, or simply just because you can, such as fancying a holiday.
The only guaranteed reason a lender will reject an application is if you’re raising capital to fund a business venture or any other investment, as it’s a residential loan so the cash cannot be used for commercial purposes.
How do re-mortgages work to release equity in my home?
What you pay for your home is not always what you owe on your mortgage. Your home can stay the same value, it can increase in value, or it can lose its value.
The amount of equity you have in your home is what’s left after you take the current market value and deduct that from what’s outstanding on your existing mortgage.
As an example, a home valued at £100,000 with an outstanding loan amount of £25,000 would leave £75,000 of equity. Any amount of the money you have tied up in the property is yours and can be accessed by refinancing. Using the same example, you would own 75% of the property, with the remaining 25% equity belonging to your lender. You can increase the Loan to Value from 25% to 50% by taking out a 50% LTV remortgage for £50,000 however, in doing so you would be increasing the longevity of the loan, or you would increase your monthly payments if you chose to keep the term of the loan the same.
Is now a good time to remortgage?
If you are on a standard variable rate, it is often the case that remortgaging will get you a better deal.
The best time to remortgage is when the market rates are low. Look out for announcements from the Bank of England (BoE) about interest rates cuts and increases. When the BoE cut rates, better deals spring up. They disappear just as fast when they increase the interest rates as the rate they announce is what the banks can borrow at. The less it costs lenders to borrow, the better the deals are.
Will I need a solicitor to remortgage?
A solicitor is required in all remortgages because the Title Deeds transfer is a legal process. There are lenders that offer legal services fee-free, however, it’s not always free as sometimes it’s just added to the total cost of your remortgage. You can instruct the lender that you’ll arrange your own conveyancing solicitor. The costs for the legal work involved in a remortgage isn’t usually as much as the initial legal work arranged for your first mortgage. That’s why some lenders will include free legal work, while others will just add the cost to the loan amount.
Will I need a survey before I can remortgage?
A survey is required to ensure your home has enough collateral to secure the finance you’re asking for. These are completed to make sure the bank isn’t securing a £100,000 of secured finance on a property that isn’t worth the £100,000 claimed to be the value of the property. Most lenders cover the survey cost and if for some reason they don’t, the cost is around £400.
Can I remortgage if I have negative equity?
It is difficult to secure a remortgage even with your existing lender when you have negative equity. The risk is far too high for them as if you default, they’ve no way to get back the money back that they invested in your property.
Should your home be worth less than you owe on your existing mortgage, your best course of action is to consult with a specialist mortgage broker. What will happen when your current mortgage deal expires is you’ll automatically switch to your lenders Standard Variable Rate. These are higher than the majority of deals and will see your monthly payments increase. Specialist lenders can cater to negative equity. What you must be careful of is to keep up your repayments.
Who’s responsible for the home valuation to decide how much I can borrow with a remortgage?
Valuation reports are always completed by someone acting on behalf of the lender. They are independent and can value your home in different ways. Some may do a drive-by inspection from the road-side only, others may require a surveyor to conduct a full home valuation report on behalf of the lender. There are other ways that desktop systems can be used, depending on the lender.
One example to give you an idea of how much your home is worth is to check the Zoopla website as the information they have is extracted from the Land Registry. By using that along with some research of similar homes to yours in the area to see how much they sell for.
The decision the lender will use though will always be a valuation report carried out by someone independent, acting on behalf of the bank or building society. These are just completed to ensure your property will be enough security for the amount of money you’re asking to borrow against your home.
I’ve defaulted on my mortgage before, can I still get a decent remortgage deal?
You can remortgage with defaults on secured loans, but it will need a specialist lender. The main banks and building societies will not provide finance to anyone who has defaulted on a secured loan.
The highest LTV you’re likely to be able to access won’t be higher than 90%. The more equity you have in your home, the better your chances of securing a decent rate. A list of lenders providing 90% and 95% LTV remortgage finance are provided further down this page.
Is it possible to remortgage without a deposit?
Yes, because your deposit will be your home equity. The exception being if you’re in negative equity, in which case, no it won’t be possible. It should be noted that legal fees and associated costs may be payable. Some lenders let you add these to your remortgage, while others may require payments to be made before proceeding with your application.
Is it possible to remortgage with shared ownership?
Yes, but there’s far fewer lenders offering this. Specialist lenders will but of the mainstream lenders, there’s not many. Some that do are HSBC, Halifax, Barclays and Nationwide.
With shared ownership, will I need permission before I can remortgage?
Yes. Everyone who has a financial interest in the property must be in agreement and approve the remortgage prior to the application being processed. Your housing association will be able to advise you on the requirements. Each have their own policies for securing finance. The vast majority of housing associations will want the details in writing and to have all the details of a mortgage offer before they’ll consider allowing it to proceed.
If you have difficulty proving your income we would like to hear from you:
These providers offer 95% LTV remortgages:
These providers offer up to 90% remortgages: