What happens if you can’t remortgage?

Why You Might Not Be Able to Remortgage — And What to Do Next

Remortgaging allows homeowners to move from one fixed-rate deal to another, keeping predictable monthly repayments. But what happens if you can’t remortgage? Homeowners in this situation may become mortgage prisoners, stuck on their existing deal, potentially paying higher repayments as their loan reverts to a standard variable rate (SVR).

Reasons Why You Might Be Refused a Remortgage

Lenders have different criteria, and some are stricter than others. Being refused by one lender doesn’t mean you cannot remortgage with another. Common reasons for refusal include:

No Proof of Income

Lenders want at least 12 months of employment records, or 2 years of trading for self-employed applicants.

Bad Credit History

Late payments or CCJs may lead to higher interest rates or refusal. Lenders typically prefer 36 months of clean credit and cleared CCJs.

Low Income

Lenders usually cap borrowing at 4x your household income. For example, a £30,000 income allows borrowing up to around £120,000.

High Loan-to-Value (LTV) Ratio

The LTV is your mortgage balance divided by your property’s value. Many lenders cap LTV at 75–85%.

Low Mortgage Balance

Having a small remaining mortgage may make remortgaging unnecessary or uneconomical after fees are considered.

A Product Transfer May Be a Better Option

If you are turned down for a remortgage, consider a product transfer with your current lender. This allows you to move to a new fixed or variable-rate deal without a full remortgage application.

Benefits of a Product Transfer

• Quick and easy – minimal paperwork and no proof of income required.
• No fees – no solicitor, valuation, or conveyancing costs.
• No affordability checks – switching with the same lender avoids detailed checks.
• Flexible – you may increase the mortgage size within acceptable LTV limits.

How to Improve Your Chances of Remortgage Approval

Even if you’ve been refused, steps can be taken to increase approval chances:

Ensure You Can Afford Repayments

Use an affordability calculator to confirm how much you can repay each month, improving your application’s likelihood of success.

Offer an Overpayment

Reducing LTV by making an overpayment can make your application more appealing. Check for early repayment fees first.

Reduce Other Debts

Lower your credit utilization ratio (CUR) by reducing credit card or overdraft debt to 25% of your limit.

Cut Back on Non-Essential Spending

Free up monthly cash by reducing spending on things like subscriptions, takeaways, or unnecessary services.

Improve Your Credit Score

Steps include registering to vote, paying bills on time, reducing debt, and using a credit-building card responsibly.

What Happens If You Can’t Remortgage?

If refused by high-street lenders, a mortgage broker can explore specialist lenders or arrange a product transfer. WIS Mortgages can evaluate your situation and provide personalized advice.

FAQs

Why might I be refused a remortgage?

Common reasons include no proof of income, bad credit history, low income, high LTV, or a low mortgage balance.

What is a product transfer?

A product transfer lets you switch your existing mortgage to a new deal with the same lender without a full remortgage application.

Can I improve my chances of remortgage approval?

Yes, by ensuring you can afford repayments, reducing debt, cutting non-essential spending, making overpayments, and improving your credit score.

What if I remain a mortgage prisoner?

If you can’t remortgage, you may be stuck on your existing deal and revert to the SVR. Seeking advice from a broker or specialist lender may provide options.

As a mortgage is secured against your home/property it may be repossessed if you do not keep up with the mortgage repayments.