Why Can You Be Refused a Remortgage?
A lender might decide to turn down a remortgage application for many reasons. Common reasons include the following:
- Credit issues such as a CCJ or default within the last six years or recent late payments.
- Multiple credit applications on your report in a short period.
- Not being registered to vote or having mistakes on your application.
- Lack of affordability to keep up with the repayments, or a variable income, such as being self-employed.
Can you be refused a remortgage for any other justification? If the lender doesn't feel you fall into their policy thresholds or doesn't wish to offer you a remortgage, they are not obligated to do so.
Can You Be Refused a Remortgage After an Agreement in Principle?
The agreement in principle is an initial offer that states what the lender will be willing to offer on your remortgage – they can withdraw this offer at any stage before completion.
If the lender hasn't explained what has changed or why they have decided not to offer a remortgage after an initial agreement, it's important to find out why so you can address their concerns on your subsequent application or when selecting a different provider.
Can I Get a Remortgage With Bad Credit?
Remortgaging with bad credit is possible, but we might suggest a specialist lender in some cases since most high-street banks and mainstream lenders are reluctant to lend to any applicant with an imperfect credit score.
However, while you can remortgage even with serious credit issues in your file, you’ll find that the interest rates and charges are higher than for a lower-risk remortgage applicant.
It may be easier to secure a bad credit remortgage than applying for a new mortgage since the equity you own in your home will somewhat offset the lender's perceived risk.
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Can You Be Refused a Remortgage and Receive a Hard Credit Check?
If a lender refuses your remortgage outright, then they won’t likely have run a hard credit check, so the application will not appear on your credit report. If the lender has rejected the application at the final stage, they have likely uncovered past credit issues on your report, in which case their search may be visible to other lenders.
Can I Release Equity When I Remortgage?
Having equity in your property improves your chances of securing a remortgage, regardless of your credit report, because if you default, the lender has a better chance of recouping the outstanding debt by selling your property at a below-market liquidation value.
However, can you be refused a remortgage if you have equity? You can – if the equity isn't sufficient to make the application viable for the lender, or if there are other unrelated issues, they may still turn you down.
Do I Need a Deposit to Remortgage, and Will it Improve My Prospects?
There are various fees associated with remortgaging, but you won’t normally need a deposit. If you have been refused a remortgage, adding a deposit might make securing the borrowing you need easier, but this isn't a common requirement.
Remortgaging fees tend to include legal costs, arrangement charges and brokerage fees. As long as you aren't looking to borrow above the lender's LTV threshold and don't have any other adverse circumstances, a deposit won't typically be necessary.
Can I Remortgage to Consolidate Debt?
If you’ve had a remortgage rejected due to other debts (calculated as part of your debt-to-income ratio), it could be worth considering a debt consolidation remortgage.
Can I remortgage to consolidate debt depends on what your property is worth, what you owe on your current balance, and the total sum of all other debts, such as personal loans or credit cards.
Debt consolidation remortgages mean you increase the mortgage borrowing to repay everything else and have one monthly repayment sum at a lower interest rate. However, because mortgages tend to run longer, the total you pay back could be higher.
Can You Remortgage in a Fixed Term?
It's not often advisable to remortgage in a fixed term because most lenders will have a contractual clause that says you need to pay an early settlement fee to exit the agreement before the fixed period ends.
Can you remortgage in a fixed term and be turned down? Yes, the lender could perceive that you cannot meet their affordability requirements when combined with the extra costs of paying an early exit charge.
Can You Remortgage With a Restriction?
A restriction sets limits on what you can do with your property, including selling it, transferring the equity, or applying for a new mortgage product. Can you be refused a remortgage due to a restriction? You can indeed.
The best action in this circumstance is to speak with an experienced, independent broker to work out how to proceed or whether there are any opportunities to remove or amend the restriction.
Whatever the reason for being refused, our knowledgeable team can work with you to assess the causes, determine the most viable way forward, and provide independent guidance to ensure you make informed choices.
Determining whether you fulfill all of the criteria, allows us as brokers to find the best mortgage deal for you.
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