What to do if you can't remortgage due to affordability

Why can’t I afford to remortgage?

There are many reasons why you might find it hard to remortgage your property. It could be because of a low credit rating, a change in how much you’re earning affecting your affordability, or a drop in property value. 

We’ve gone into each of these common causes for being unable to afford to remortgage below:

Low credit rating 

If your remortgage application has been rejected, could your credit score be responsible? Having a low credit rating tends to limit your mortgage options. You should still be able to get a mortgage, but you may need help from a specialist mortgage broker to find the right deal. 

One of the best things you can do is try to boost your credit score in the lead up to your mortgage application. It can take a while to build your credit rating, but it’ll save you a lot of money in the long run. Here are a few ways to boost your score:

1. Check your credit rating. There are three main credit referencing agencies used by lenders: Experian, Equifax and Transunion. They each have a different method for scoring individuals. To get a full picture of your credit history, check your score with CheckMyFile which collates all three agencies’ reports.

1. Look for any errors. If you spot anything on your credit report that doesn’t look right, get in touch with the agency in question to find out the details.
2. Pay off any existing debts. This can help you improve your score and boost your mortgage affordability, since your monthly outgoings will be lower. 
3. Make future payments on time and in full. This shows lenders you’re able to manage your debts responsibly.
4. Avoid applying for more debt. Applying for credit cards, personal loans and other types of credit in the run up to your mortgage application can make it harder to remortgage.

You’ve experienced a drop in income

Has your personal or household income fallen since you took out your existing mortgage? Maybe you and your partner have started a family, and one of you is on parental leave. Or maybe you’ve switched jobs recently, become redundant or self-employed. All of these changes can impact your overall impact, which in turn affects your ability to get a new mortgage deal.  

Don’t panic if you fall into one of these categories. There are plenty of specialist lenders who’ll consider your application as long as you pass their affordability checks. Tembo can help you find which buying schemes you’re eligible for, and how you can boost your mortgage affordability. Simply create a free Tembo plan to get started.

Keep reading: Can you get a mortgage when pregnant or on maternity leave?

Your home is worth less than your mortgage

If your property has fallen in value and it’s now worth less than your outstanding mortgage amount, this can make it really difficult to remortgage. This is known as negative equity and can be the hardest obstacle to overcome. 

You might also like: Are house prices rising?

What can you do if you can’t remortgage due to affordability?

If you can’t remortgage due to affordability checks, there are a number of things you can do. First off, don’t panic. In our experience, many people who’ve been rejected for mortgage affordability reasons go on to get a mortgage elsewhere. 

Mortgage lenders come in all shapes and sizes. The same is true for their mortgage products and lending criteria. So while you might not meet one particular lender’s needs, this doesn’t mean all lenders will make the same decision.

1. Avoid applying for a new mortgage straight away

Did you know that too many credit applications in a short space of time can make it harder to get a mortgage? Whenever you apply for a credit card, personal loan or other form of debt, the lender will run a credit check before deciding whether to approve your application. Some banks do the same thing when you open a new current or savings account. 

There are two types of credit check. The first is known as a ‘soft’ search. You’ll be able to see this search when you look at your own credit report. This won’t affect your ability to get credit. 

The second type of credit check is known as a ‘hard’ search. This leaves an imprint on your credit report that can be seen by lenders.

If you have too many hard searches within a short space of time, this can make lenders wary. They might worry that you’re desperately trying to borrow money and won’t be able to pay them back ⁠— even if that’s not the case!

2. Get expert advice 

If you can’t remortgage due to affordability, speak to an expert mortgage broker. You don’t need to tackle this problem alone. Mortgages can be complicated, and there are more options out there than you might expect: you should get an expert to do all the research, calculations and admin for you. At Tembo, our expert team and smart tech will find all the schemes you’re eligible for to help you discover what solutions there are out there. 

Once we’ve found the right scheme to boost your affordability, your mortgage broker will walk you through each step to complete your remortgage.

Create a plan with us today for free to get started.

3. Consider staying with your same lender

If you are happy with your current lender, you can usually do a product transfer with the same provider and not go through a full affordability check again. This might mean you don’t have access to the best rates available as you’ll be restricted to your provider’s current deals. 

Can I remortgage with bad credit?

It is possible to remortgage with bad credit, but you’ll usually have to choose between a much smaller selection of mortgage lenders than you would if you had a good credit rating. 

If you’ve struggled with debt in the past and this is reflected in your credit report, it can be hard to find the right mortgage by yourself. By creating a plan with Tembo, you’ll get a personalised recommendation on what schemes you’re eligible for. It’s free to make a Tembo plan, plus it only takes 10 minutes to complete and there’s no credit check involved. Once you’ve got a plan, you can book an appointment with one of our mortgage experts to talk through your options.

How much can I remortgage?

How much you can remortgage depends on how much is outstanding on your mortgage as well as your reasons for remortgaging. For example, do you want to switch to a different interest rate or release equity to use for a passion project? 

As we touched on earlier, each bank and building society will have their own set of rules, so they’ll ultimately decide how much you can remortgage. They’ll look at your income, credit rating, day-to-day living costs and outstanding balance to determine how much you can afford to borrow. 

They’ll also carry out their own valuation on your home to find out how much it’s worth. If the property has lost value, they might not offer you the amount you need. Luckily, there are ways to boost your affordability. To find out what options are open to you, create a Tembo plan.

How soon can you remortgage before your fixed rate ends?

You can remortgage your home whenever you like, but remortgaging before your fixed rate mortgage term ends could see you having to pay an early repayment charge (ERC). 

This will either be a fixed fee or a percentage of the outstanding loan. Exactly how much it’ll cost will depend on your lender, the terms of your original mortgage offer and how much you have left to pay. 

Something to keep in mind is that even if you have to pay an early repayment charge, this could still work out cheaper if you remortgage to a lower interest rate. The reduced cost of your new mortgage deal could offset the early payment penalty.

Worried that interest rates will rise before your fix ends? Talk to Tembo. We don’t have a crystal ball, but we’ll weigh up your options to find the best scheme available to you from across the market. That way, you’ll have a better idea how much you can expect to pay. 

To learn more, read our How long should I fix my mortgage for? guide

Is it a good time to fix my mortgage?

Fixing your mortgage can offer your security and peace of mind, particularly during times of economic instability. You’ll know exactly how much you’ll need to pay each month and you won’t need to worry about interest rate rises. But it can be risky too. Interest rates could fall and leave you stuck with a more expensive deal. 

Tracker mortgages often come with lower interest rates than fixed rate deals, but how much you pay month to month can go up or down. So whether you’re happy to go for a tracker mortgage depends  on how comfortable you are with risk, as well as if you have the ability to cover the cost if mortgage payments go up. You can always fix your mortgage rate later on too, for example if your circumstances or needs change, or lower rates become available. 

What happens if you can’t remortgage?

We sometimes speak to people who are convinced they can’t remortgage, only for us to find them the right scheme to boost their affordability. We’ve helped thousands of buyers, remortgagers and home movers increase their mortgage affordability through a range of innovative schemes. 

This is all thanks to our smart decisioning technology and award-winning team, which works together to find which schemes you’re eligible for from over 20,000 mortgage products and more than 100 mortgage lenders. 

This includes all of the large high street banks you’d know, along with a number of specialist lenders that you might not have heard of. Many of the lenders we work with are only available through an advisor. Going directly to a bank or building society could see you missing out on the most suitable deal for you! 

With our smart technology and experienced advisors, we can help you explore all the options open to you to boost your affordability and get the right remortgage deal. Create a Tembo plan to get started, or take a look at our interest rate tracker to see the best fixed, discount and tracker mortgages on the market today.