How to refinance your home (even if you don’t have perfect credit)

Are you struggling to pay your bills every month? Worried you can’t make your mortgage payments? Find out how to refinance your home (even if you don’t have perfect credit).

For many people, paying off their home mortgage is a far-distant fantasy. In fact, some people struggle to get the money together for their monthly repayments, never mind considering paying back the lump sum.

And what if you are struggling with your monthly mortgage payments, or life in general right now? What are your options?

The good news is that you don’t need to stick with your current deal if it’s not working for you. With some research and a little bit of work, you can refinance your mortgage and get your finances (and stress levels!) under control. Here’s what you need to know about mortgage loan refinancing.

What is mortgage loan refinancing?

When you bought your home, the chances are you took out a mortgage in order to raise the funds needed. And since then you’ve been paying back that loan every month.

But what happens if your circumstances change? If you lose your job, split with your partner, or interest rates rise and you can no longer afford to repay your mortgage?

This is when mortgage loan refinancing comes into play. The goal of mortgage loan refinancing is to lower your monthly payments – either by (usually) extending the loan term or securing a lower rate of interest, if possible.

What if your credit score is poor?

It’s hard enough these days securing a loan with a perfect credit score it can seem. So surely refinancing a mortgage with a poor credit score must be close to impossible?

While a better credit score will certainly bag you a lower interest rate, it’s not impossible to refinance your mortgage with a poor credit score. And on the plus side, paying off your current mortgage with the refinancing will have a positive impact on your credit history.

Refinancing your mortgage will also help you manage your monthly obligations going forward, which will help you to keep better track of any debts and avoid overdue payments. Apart from reducing the stress on you, overdue payments and loan foreclosures are the biggest contributors to unfavourable credit ratings.

How do you refinance a mortgage loan?

So if you wanted to refinance your mortgage, how do you go about it? This is the process you’ll follow:

  • Establish your goal – what’s your aim from refinancing? Do you want to shorten (or maintain) your current mortgage term while lowering your interest rate, for example?
  • Find out your current credit score – check your credit history to learn your credit rating.
  • Research your home’s value – how much is your home worth right now? One way to find this out is to research how much similar properties near yours have sold for recently.
  • Look for the best mortgage rate – compare refinance rates online.
  • Get a clear picture of the all-in costs – refinancing your mortgage can lead to a number of fees, including application fees, appraisal costs, origination fees, document processing fees, an underwriting fee, a credit report charge, title research and insurance, recording fees, and money transfer fees. These can vary from lender to lender, so make sure you get a full picture before deciding on one. You can also try using’s refinance mortgage calculator to find out your new payments and see how much money can you save in interest.
  • Get your paperwork together – gather, print or download statements and any other documents you may need during the refinancing process.
  • Lock your rate – when you’re ready, lock in your mortgage refinance rate with your chosen lender.
  • Put aside money for expenses – finally, once you’re ready to start the prices make sure you have the money available to cover the expenses.

Where do you start looking?

If you’ve decided that you want to proceed with mortgage loan refinancing, then a good place to start is to use refinance home loan comparison sites to find the best home loan interest rates. This way you can browse your options to find a lender that meets your needs.

Photo by Luke Stackpoole