Remortgage success after ill health and unexpected arrears

Ill health can disrupt income quickly, and the knock-on effect can be stressful—especially when a mortgage lender’s flexibility runs out. This case study looks at how a homeowner was able to remortgage after a difficult period, when arrears had appeared on their credit file in circumstances that weren’t straightforward.

The client’s situation

The client was self-employed and experienced a significant drop in income during a period of ill health. Their existing lender initially agreed a payment holiday, which helped them manage essential living costs while they recovered.

However, when the client later checked their credit file, they were surprised to see that the agreed payment breaks had been recorded as missed payments. As time went on, the lender would not extend further flexibility.

The client also explored an interest-only arrangement to improve cash flow, but this was declined. With capital repayments remaining high and affordability under pressure, the client began to fear that selling the property might become the only option.

They approached us to understand whether a remortgage could realistically be possible.

The challenge

This was not a typical remortgage scenario. Several factors combined to make the application harder on paper:

• Arrears showing on the credit file, which can restrict access to many mainstream remortgage products
• Affordability considerations, driven by reduced self-employed income
• A need for stability, because the client strongly wanted to keep their home rather than face the disruption of moving
• A lender perception challenge: the arrears were linked to an agreed payment break, but they still appeared as missed payments

The key issue wasn’t only finding a lender willing to consider the case—it was finding one that could take a holistic view of the circumstances, including the reason behind the arrears and the client’s realistic ability to meet payments going forward.

Our approach and solution

The first step was to build a complete picture of the client’s position rather than focusing solely on the credit file.

We reviewed:

• the client’s income and how it had changed during and after illness
• the credit file history and what it showed
• supporting evidence around the ill health period and the payment break
• the client’s plans for the future, including how they expected income to recover

It became clear that the arrears were not the result of ongoing non-payment or poor financial management. Instead, they were tied to a misunderstanding in how the agreed payment break was reflected on the credit file.

Structuring the application

To strengthen the affordability profile, we recommended a Joint Borrower Sole Proprietor (JBSP) structure, adding the client’s daughter as a supporting applicant. This approach can help demonstrate affordability without changing the client’s legal ownership intentions.

Lender selection

We then matched the case to a lender known for case-by-case assessment and a more human approach to underwriting, where the story behind the numbers can be considered alongside the evidence.

Note: Specific lender availability and criteria change over time, and not every case will be suitable for the same options.

What was arranged

The remortgage was structured to provide both affordability support and longer-term predictability.

• Loan amount: £455,000
• Property value: £950,000
• Loan to value (LTV): 47%
• Product type: five-year fixed
• Fixed rate: 5.49% (five-year fix)
• Structure: JBSP with the client’s daughter added as a supporting applicant
• Term: extended to age 80 to allow flexibility

The fixed rate period was designed to give the client breathing room and stability while income recovered. The JBSP structure provided additional support to meet affordability expectations during the remortgage period.

How the process was managed

Cases involving arrears and ill health require more than completing an application form. They depend on how the information is presented and supported.

In this instance, the application was handled with a focus on clarity and context:

• the case was presented to underwriting with the arrears explained directly, supported by relevant documentation
• the application was coordinated carefully to ensure the lender had a consistent, evidence-led narrative
• the solicitor was engaged to ensure the JBSP structure was correctly reflected and understood

The aim was to avoid glossing over the credit history and instead help the lender understand what happened, why it happened, and why it was unlikely to repeat.

The outcome

The remortgage was approved, allowing the client to stay in their home.

Key outcomes included:

• Approval achieved with a lender willing to consider the full circumstances
• Funds released to refinance and reduce monthly pressure
• Stability through a fixed-rate term while the client rebuilt income
• Avoiding a forced sale, supporting the client’s desire to remain in their home
• A structured application using JBSP to support affordability without changing the client’s underlying ownership intentions

What this case shows

Every situation is different, but this case highlights a few important themes for homeowners facing remortgage challenges after ill health or unexpected arrears:

• Arrears aren’t always the whole story—the reason behind them matters
• Evidence and explanation can be critical, especially where credit file entries don’t reflect the full context
• Affordability can be supported through structure, including JBSP where appropriate
• Lender choice is often the deciding factor in specialist remortgage scenarios

If you’re dealing with a difficult remortgage situation, a specialist approach can help you understand what’s possible and how to present your circumstances in the strongest way.