Remortgaging with bad credit rating

[Snowbites]

Changed username as this is all rather embarrassing. My credit rating has fallen over the past few months - turns out the first reason was a stupid £50 debt I hadn’t paid for months that I didn’t know existed. Couple of delayed credit card payments following this and my score has tanked

We are due to remortgage in the next few months as our fixed deal is coming to the end

My question is this - I am happy to stay with the same provider, if I ring them and ask for a current new deal quote will they check my credit file, or will they offer a quote just based on my current mortgage deal/payments etc? I have never missed a mortgage payment. I am worried that if I ring and ask for a new deal they will look at my file and whack my interest up. Other option is I leave the deal to run out and continue on their current rate (which I assume will be a bit higher than what I pay currently)

Please let me know if you’ve been in this situation and what happened. I do have a good wage that is consistent so I know I can pay the mortgage, I am just worried!

Thanks for reading

[whatsleep]

Best advice I can give you is to speak to an independent financial advisor. The more products you apply for and fail to obtain, the hits your credit rating will receive. IFA will know which products are most achievable for you including your current mortgage provider.

We have just changed our mortgage over. When we contacted our provider we weren’t offered a great deal. Our IFA then got us an amazing deal which turned out to be with the same company.

Hope this helps in a round about way!

[JourneyToThePlacentaOfTheEarth]

When our fixed rate was coming to an end our mortgage provider rang us and offered us a remortgage. They said as long as we don't want to borrow more money they will start the new deal based on the agreed market value of the house, no new credit check needed

[MickeyLuv]

I've renewed my mortgage deal a number of times with a terrible credit rating. As someone has already said, if you stay with your current lender as don't want to borrow any more, they will usually switch you to a new product with no credit check.

Mine is with Halifax, most recently done online in the last could of weeks and I didn't even have to speak to anyone.

[ichbineinstasumer]

We are about to remortgage and found that if we stay with current provider they will just provide a new deal without asking for all the financial information and presumably without doing checks - I did worry as my DH has a debt that he has not dealt with well, so I plan to stay with existing provider to avoid the stress of the remortgage and because their rates are competitive. I think in your situation it would pay to stay put unless it's a bad deal as the credit rating is likely to be a problem - but you can resolve it before the new deal ends

[Snowbites]

I am with Halifax too, pleased to hear this!! My husband has talked about us taking out a bit more on the mortgage to pay of some credit cards (small amount £5-10k) but I assume this might trigger a credit check...?

[ichbineinstasumer]

yes I think it might. The amount of card debt would also be asked about, even though these haven't been in default. Suggest you read martin Money Saving Expert's Remortgage Guide which you can order for free as a pdf. It had some good advice, including on improving your credit rating although you do need a bit of time in hand to do this.

[MrTrebus]

Mortgage advisor here

To renew your deal you will NOT be credit checked
Any new application for further borrowing WILL involve a credit check plus seeing all your pay slips and bank statements again. You can renew your current deal now and apply to borrow more later so maybe just do that when your credit has improved.

[MrTrebus]

FYI a remortgage is when you move your mortgage from one lender to another so the above mentioned guide will not apply. Remortgage is the word used by most people but what you actually want to do is just renew/choose a new deal with your current lender and perhaps apply for some further borrowing.

[NotSuchASmugMarriedNow1]

What interest rate are you currently paying and what will the new interest rate with your current lender be?

[Snowbites]

Thanks MrTrebus!

I think we are currently on 2.49% or there abouts. Am hoping LTV has improved a bit although we took a 2 year deal last time as it was better than a longer fixed. House value probably unchanged from 2 years ago. Will likely take a longer fixed term this time because of all the goings on at the Bank of England...

[NotSuchASmugMarriedNow1]

2.49% does sound awfully high but I guess it all depends what new rate they will be offering. Presumably they will transfer you onto the SVR which is less than 1% so if thats the case there's no point changing anyway is there?

[MrTrebus]

@notsuch Halifax SVR (as most lenders) is currently 3.74% I believe, so always beneficial to switch to a new product.

[Witsender]

I don't know if I would borrow more to pay off credit cards though.

[Snowbites]

I’ve put the current value of the house and outstanding mortgage into the Halifax online calculator - it is quoting 1.89% on a 2 yr fixed and 2.29% on a 5 yr fixed. 5 year is about £35 per month more money. LTV in 60-75% bracket

[tornandhurt]

If you simply want to switch to a new deal with your current lender i.e. keeping the same mortgage term and amount, there is no checks - its not classed as remortgaging, its just a product change.

If you wanted to change lender or borrow more this would be classed as remortgaging and as a result would be subject to a full credit check.

The standard variable rates are currently around the 3.7% mark - you should be able to fix in with your existing lender for less than this.