Most homeowners remortgage at the end of their fixed-rate period to prevent being moved onto their lender’s higher Standard Variable Rate (SVR)*. But despite the common benefits of remortgaging, some homeowners fail to act, often resulting in them paying thousands more in interest than they need to. One of the reasons homeowners don’t remortgage is that they believe that doing so could damage their credit score, especially if their circumstances have changed since taking out their original mortgage. The good news is, a mortgage broker can help to find the lenders that are likely to accept your application, based on your current financial situation, without impacting your credit score. However, applying to lenders without a proper understanding of their eligibility criteria can put your credit score at risk, so it’s recommended you seek guidance from a mortgage advisor and let them approach lenders on your behalf. In this guide, we’ll explain the different types of credit checks and what to be aware of to protect your credit score when remortgaging.
Soft Credit Check vs Hard Credit Check
A soft credit check provides lenders with some basic details about your credit history without revealing your full report. This type of check only leaves a soft footprint on your file, which is only visible to you, not to other lenders, and won’t affect your credit score. Soft credit checks are often nothing to worry about. It’s common for lenders to run this type of check before giving you a deal in principle, and then running a hard credit check on application. Some lenders only run a soft credit check for the entire application and base their assessment more on your payment history and other factors.
A hard credit check provides lenders with a full picture of your credit report and score. Most lenders will carry out a hard credit check at some point during your application. The key difference to be aware of is that a hard credit check goes on your file and is visible to other prospective lenders, usually for 12 months. Therefore, if you allow a lender to carry out a hard credit check and then they reject your mortgage application, this could put other lenders off when they assess your credit down the line.
Can Remortgaging With My Current Lender Damage My Credit Score?
If you are switching to a new deal to prevent yourself from being moved onto your lender’s SVR and there are no material changes (changes to your mortgage term or mortgage balance), then it’s unlikely your lender will assess your credit. They would have done this when you took out your original mortgage, and as long as you’ve kept up your repayments the initial checks should suffice. However, if you are switching to a new deal to borrow more money or reduce your term, then your monthly repayments could increase and therefore your lender may want to reassess your credit and affordability. If you are rejected at this point, there is a possibility your credit score could be affected. Whether you want to get a better rate, borrow more, or reduce the term of your mortgage, it’s important to speak to a mortgage broker first. They’ll be able to see whether you’re likely to be rejected by your current lender, and they’ll also be able to search the market to see what deals are available from other lenders. Quite often, you’ll be offered better terms if you switch to a new provider.
Can Remortgaging With a New Lender Damage My Credit Score?
It’s common to switch to a new lender when remortgaging to get a better deal. Whether your circumstances have changed since taking out your mortgage or not, it’s a good idea to get a mortgage advisor to search the market to see what options are available to you. When switching lenders, you are essentially taking out a new mortgage, and therefore you will have to pass the new lender’s credit and affordability checks. If you get rejected, this could damage your credit score. One of the safest ways to remortgage is to speak to a mortgage broker who understands the criteria of each lender. He or she will understand which deals you’re likely to be accepted for, which can help protect your credit score and save you a lot of hassle.
Can Speaking to a Mortgage Broker Damage My Credit Score?
No. Our mortgage brokers will ask you questions to try and determine your affordability and credit history, but they won’t run a hard credit check. Once we understand your financial situation and your reasons for remortgaging, we’ll search thousands of products to find a suitable deal that you’re likely to be accepted for. When you’re ready, we can apply on your behalf, and liaise with your lenders and solicitors to help make your remortgage journey a success.
The Bottom Line
The worry of damaging your credit score should not stop you from talking to a mortgage broker to find out what options you have. Remortgaging could be one of the most financially savvy things you can do as a homeowner – potentially saving you thousands of pounds in interest each year. Speaking with a mortgage broker won’t affect your credit score, and he or she will work out which deals you’re likely to be accepted for so you don’t damage your credit score on application either.
We’ve been helping our local community with remortgages for over 30 years! We search thousands of products to find a deal that suits your needs. We also guide you through the process and liaise with all parties to ensure your remortgage goes smoothly.
Book your FREE no-obligation consultation with one of our friendly advisors to get going quickly. We have offices in Frimley and Basingstoke, or we can help you remotely via phone or video call if you’d prefer. We look forward to chatting with you!
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Your home may be repossessed if you do not keep up repayments on your mortgage.
