Free remortgage calculator + tips for getting the best deal

Limited supply and affordability are significant problems in the UK housing market, especially for people with less-than-perfect credit. However, recent interest rate cuts by the Bank of England present opportunities to remortgage your existing loans and save on monthly repayments.

If you’re a UK homeowner with a variable rate mortgage, you might be sick of your mortgage after the last few years of high interest rates. If you’re looking for a way to save on your monthly payments, a remortgage could be a great way to control your expenses. But what if you have poor credit?

Well, the good news is that even if your credit score isn’t quite where you want it to be, you could still qualify for a remortgage. If you can’t access a remortgage through a high street bank due to your credit score, you have other options, and can improve your score to qualify in the near future.

Here, we’ll take a closer look at a few tips for getting the best deal on a remortgage even if you have poor credit, plus we include a handy remortgage calculator that will help you determine if remortgaging is the right move for you!

Get ready for your remortgaging journey

There are a few essential steps you need to take before you remortgage your home.

1. Check your credit score

Check your credit score with a couple of the UK’s main credit reference agencies, Equifax, TransUnion, and Experian. This process gives you an idea of where your credit score is. However, perhaps more importantly, it allows you to resolve errors or other outstanding issues.

Pro tip: With Pave Plus, you can view your Equifax and TransUnion score in the same place at the same time!

2. Understand your existing mortgage

Get your current mortgage details from your bank or building society app, your annual statement, or via customer support. Look out for early repayment charges (ERCs) and exit fees. These details will help you decide if a remortgage makes financial sense.

3. Gather your information

Next, you must gather relevant personal and financial information to streamline the process. Some of the documentation you will need includes bank statements, payslips, and photographic ID.

Timing your remortgage

Getting the timing right can have a significant impact on your remortgage terms. Here are some things to look out for:

• Start researching about three to six months before your current deal ends. This will ensure that you don’t revert to a costly Standard Variable Rate (SVR) mortgage.
• Monitor market conditions and try to lock in a rate during times of stability or low interest rates.
• Seasonality is another factor to consider when looking for a good rate. For example, autumn and winter are typically slower months for lenders, so you may find a better rate during this period. Likewise, some lenders may be willing to offer competitive deals as the end of the year nears to meet their annual targets.

Keep in mind that outside of having a plan in place by the time your current deal ends, timing your remortgage perfectly is difficult to do. So, think of the timing as a nice-to-have, but not a major priority.

How to Improve Your Chances For Approval

Gathering your documents and timing the mortgage market is a great start. However, there are some other things you can do if you want to bump up your chances of being approved for a remortgage.

Improve your credit score

Boost your credit score in the lead-up to your application by:

• Paying bills on time and in full, as your payment history is the single-most important factor influencing your credit score.
• Reducing or clearing any outstanding debts to lower your credit utilisation ratio.
• Avoiding new credit applications in the months before your application, as each new application for credit requires a hard credit check, which will cause a slight drop in your credit score. Plus, too many credit applications can indicate to lenders that you’re not in a secure place financially.

Ultimately, improving your credit score is all about eliminating signals that are red flags for lenders.

Show a stable income

If you’re self-employed, ensure you keep meticulous income records. This documentation can help you prove you have a stable enough income to pay off a remortgage.

Find the right lender

The right lender is a key component of remortgaging, especially if your credit history is less than ideal. The process can be daunting, but by understanding the options available and working with the right professionals, you can find a deal that suits your circumstances.

Use a specialist broker

Specialist brokers can often help connect borrowers with lenders who specialise in adverse credit cases. Unlike high-street banks, these brokers can access niche lenders like credit unions that might offer deals that you aren’t advertised as heavily.

Investing some time into finding specialist brokers can be worth it. If you look for brokers who deal with adverse credit ratings, pay particular attention to those that offer “whole of market services”. These brokers are not tied to specific lenders, which allows them to offer a broader range of options.

Finally, always do your due diligence and review the broker’s track record. Look into their reviews, see if any complaints have been lodged against them, and make sure that they help borrowers with poor credit, rather than exploiting them.

Understand Your Options For Remortgaging

You have two main options for remortgage loans: fixed-rate and variable-rate mortgages. Each has advantages and disadvantages.

Fixed-rate mortgages typically come with higher initial interest rates. However, these loans are shielded against rate hikes and allow for more predictable payments.

Variable-rate mortgages, on the other hand, fluctuate with market conditions. However, the initial rate is often quite favourable.

Negotiate where possible

While some lenders are inflexible in their loan terms, you may be able to negotiate your remortgage terms with others. Some tips for negotiating a better remortgage deal include:

• Getting a number of quotes and using them as leverage to get a better deal.
• Negotiating reductions in fees such as the remortgage engagement fee.
• Asking your broker about incentives like free valuations, cashback offers, or eliminated legal fees.

Common remortgaging pitfalls to avoid

Understanding the main reasons why remortgage applications are denied can help you adjust your strategy for better chances of success.

The more you know about why remortgage applications are commonly denied, the more you can do to prepare your application for success. Common factors that contribute to denied applications include:

• Ensuring your documents are detailed, accurate, and complete
• Avoiding late payments on any other loans
• Avoiding new debts

The bottom line: Remortgaging with bad credit may be within reach

Remortgaging is an opportunity to realign your old mortgage with your new financial goals. You could potentially save thousands of pounds each year with a remortgage, even if your credit score needs improvement.

That said, the better your credit score, the better your opportunities for savings will be. To get started improving your credit score, download the Pave app today. Pave helps you build and protect your credit score with bills monitoring, so you never miss a payment. Plus, with Pave Plus, you can actively improve your payment history with a credit builder account.

To see why hundreds of thousands of people across the UK have trusted Pave to help build their credit, download the app today! 

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