Do mortgage companies do another credit check before completion?

So, you are selling your house and have already prepared your home for sale, exchanged contracts, and moved out of the property. You are just about to reach the last step in the buying and selling process, completion day, in which the title deed of the property being sold will be transferred to the buyer and they will become the legal owner. At this stage, you may be wondering whether mortgage companies do another credit check before completion. In this article, we have put together a comprehensive explanation to answer your questions and clarify the process before the final stage of completion.

Applying for a mortgage

If you are a future homeowner who has just applied for a mortgage, you may have noticed that your credit score has been impacted. Although you are in the process of completion, the change in credit score may make you nervous. What could happen if a lender runs another credit check between exchange and completion? Is it possible that the change in credit score could result in the mortgage falling through?

Is there a credit check before exchange?

Lenders run extensive mortgage credit checks to verify whether you will be able to afford the mortgage you are applying for, as well as the chance that you will fail to make mortgage payments. To run these checks, they will ask questions about a number of factors such as: level of income, source of income, debts, number of dependants, age.

Lenders will take a look at your credit history and will use one of many credit reference agencies (CRAs). If you have a history of mismanaging money and accumulating debt, your choice of lenders and ability to obtain a mortgage will be seriously impacted.

Is there a credit check after exchange?

Once the contract has been exchanged, the property purchase is made legally binding between both parties. This may make you think that the sale is secure, but many people do not know that even at this point the sale can fall through. This could happen if the seller has backed out or if the lender has withdrawn the mortgage offer.

The lenders may run a secondary credit check after the exchange which has given them reason to feel less confident about your affordability.

What factors may affect a credit check between exchange and completion?

A credit check may be run at this stage of the process to be certain that there have been no significant changes before final completion. Lenders usually re-run a credit check just before completion to check the status of employment.

A worry people have is that a second credit check would further impact their score but you can rest assured that multiple checks with the same lender will not affect your credit score.

Could there be a final mortgage credit check before completion?

There is a possibility that there will be a mortgage credit check before completion. Lenders may have reasons to check your affordability, particularly if something substantial changes on your mortgage application which could impede your ability to keep up with payments.

This includes:

  • An application for a higher loan
  • An application for a longer or shorter mortgage term
  • Adding or removing a party from the mortgage application
  • A change in employment
  • A change in income

If any of the above do change before completion, you should inform your mortgage broker to receive advice on how best to raise this with your lender. There is a possibility that these changes will delay the process or result in the sale falling through.

If you have concerns about credit checks between exchange and completion, the best advice we can give is to ask a broker. FastCash4Houses hopes that this article has alleviated your worries about another credit check before completion.

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