Alternatively, remortgaging may involve increasing the amount of a property that is mortgaged, thus releasing equity that may be used in a number of ways, for example, to pay for home improvements or to pay off other debts. The latter option can reduce total monthly outgoings by allowing the homeowner to pay off debts with uncompetitive lenders, such as credit card debt.

Borrowers who have an adverse credit history may be able to improve their credit rating through a bankruptcy remortgage. Thanks to the Internet, such plans are now much more accessible than previously. Many lenders offer remortgages designed especially for borrowers who have been declared bankrupt. Due to high competition in the bankruptcy remortgage market, some low rates can be found.

Quotes for bankruptcy remortgages can be accessed easily online and if desired a plan can be processed and approved online. The process can be completed very quickly, which is vital if a borrower’s home is already at risk.

There are a number of different types of bankruptcy remortgages. The choice of plans includes discounted rates, fixed rates and variable rates. The rate and features of each plan will depend on its provider and the personal circumstances of the applicant. In particular, self-employed applicants may face extra hurdles in finding a suitable plan. A good specialist lending company should be able and willing to offer expert advice to bad credit applicants. Further information and help relating to bankruptcy can be found at the Citizens Advice Bureau.

To secure the best deal, when looking to switch a home loan plan, an applicant should contact as many providers as possible for advice and quotes. It is a good idea to check the loan contract and reputation of a provider before switching a mortgage plan.

Despite being held steady by the Money Policy Committee at their last meeting, it is thought another increase is on the cards, pushing more homeowners towards their financial limits.

This has prompted many homeowners to take out mortgage insurance in case they cannot keep up repayments.

More and more people are being pushed towards bad credit mortgages as they are forced to default on payments for their home, as mortgage repayments soak up an increasing proportion of their income.

To cushion the potential blow of another rate hike, homeowners have been advised to plan ahead if they expect to remortgage and thoroughly explore the options available, as many good mortgage rates are still available.

David Hollingworth, from London and Country Mortgages, said homeowners should not panic.

He told This is Money: "Fixed rates have been coming down and while variable rates tend to be cheaper, not everyone suits them.

"Those who have a pretty sizeable mortgage like to know where they stand."

Many customers and investors have pulled their funds, sending the situation into a spiral into which other banks are being drawn.

Banks have begun to face problems within their usual culture of interlending as the US sub prime mortgage crisis has led many banks to restrict their lending policies.

The bank is Britain's second-largest mortgage provider, after Northern Rock, with 5.5 million mortgage customers.

The bank has denied claims that it is to seek assistance from the Bank.

In a statement the company said: "We have not approached the Bank of England for assistance. We have a very different business model to Northern Rock and our funding is not overly reliant on wholesale markets."

If more banks are to follow the path of Northern Rock, the government could face significant pressure to reimburse savers.