Do you need a broker for a bad credit remortgage?

You do not have to use a broker to remortgage, including with bad credit, but many people find one worth using. A broker who regularly works with adverse credit cases knows which lenders are more likely to consider a CCJ, default, mortgage arrears or a past IVA, which can save time compared with approaching lenders one at a time.

What does a broker actually do?

A mortgage broker, sometimes called an adviser or intermediary, looks at your circumstances and compares mortgage products across some or all of the market, depending on whether they are independent or tied to a panel of lenders. For a bad credit remortgage specifically, a broker who specialises in this area tends to know:

• Which lenders currently consider your particular credit issue, such as a satisfied CCJ or a default from a specific period
• What documents and explanations a lender is likely to want
• Whether a product transfer, further advance or a full remortgage suits your situation better
• Which lenders only accept applications through a broker rather than directly

When going direct might work

If your credit history is relatively minor, such as one missed payment some time ago, and your income and outgoings are straightforward, you may be able to approach a mainstream lender directly, including your current lender for a product transfer. Our page on product transfers with bad credit explains when staying with your existing lender can involve fewer checks. Going direct also avoids any broker fee, where one applies.

When a broker tends to help more

Does a broker cost more overall?

Broker arrangements vary. Some brokers are paid entirely by commission from the lender, so there may be no direct fee to you, while others charge a fee in addition to or instead of commission. We cannot quote typical fee amounts, since these are set by individual firms and change over time, so ask any broker to explain their charges clearly before you proceed.

What this means for a bad credit remortgage

If you have something on your credit file, a specialist broker’s main value is usually knowing the current lending landscape for your specific issue, rather than a generic promise to “get you accepted”, which no legitimate adviser can guarantee. Being open with your broker or adviser about what happened and when helps them match you to a realistic lender rather than one likely to decline you. Our guide on explaining bad credit to a mortgage adviser and our guide on what a mortgage adviser will ask you cover how to prepare for that conversation, and our page on remortgaging with a low credit score explains more about how lenders in this part of the market assess applications.

What to prepare before you speak to a broker

Coming to a first conversation with some basic information ready tends to make it more productive. A broker will usually want to know roughly when any CCJ, default, missed payment or insolvency happened, whether it is satisfied or still outstanding, your income and main outgoings, and how much you are hoping to borrow or release. Having recent payslips or accounts, your latest mortgage statement and your statutory credit report to hand can save a second call to gather the same information later.

A worked illustrative example

Suppose two people approach the market with similar mortgages but different histories, an example for illustration only. One has a single satisfied default from several years ago and straightforward, salaried income. They may find a mainstream lender willing to consider them directly, without needing a specialist broker, since their situation is relatively simple to assess. The other has a CCJ from eighteen months ago, is self-employed, and was declined by one lender already. For them, a broker who specialises in adverse credit and self-employed cases is more likely to know which of the smaller number of lenders willing to consider that combination of factors is worth approaching, rather than risking further declines and hard searches through trial and error.

Common mistakes when choosing a broker

• Not asking about experience with your specific issue. A broker who mostly arranges straightforward remortgages may have less current knowledge of adverse credit lenders than one who specialises in this area.
• Applying to a lender first, then bringing in a broker after a decline. A decline can add a hard search to your file. Getting advice before applying, particularly if you already suspect your credit history is a factor, can avoid an unnecessary decline. Our guide on what to do if your remortgage is declined covers what to do if this has already happened.
• Not clarifying how a mortgage in principle will be obtained. Ask whether the broker will use a soft or hard search to explore your options, since this affects your credit file. Our guide on whether a mortgage in principle affects your credit score explains the difference.
• Withholding details about your credit history. Leaving out a CCJ or default because it feels easier does not change what a lender’s own credit check will find, and it wastes time on an application likely to fail.
• Not comparing more than one broker. Fees, panels of lenders and experience with adverse credit can differ between firms, so it is worth a short conversation with more than one before committing.

Making the decision

Weigh up the complexity of your situation against the cost of using a broker. A single, older, satisfied issue on an otherwise straightforward application may not need specialist help. Multiple issues, self-employment alongside adverse credit, or a previous decline are all situations where a specialist broker’s knowledge of the current market is more likely to be worth it.