Switching bank accounts affecting mortgage applications (for how long?) 24 October 2022 at 12:18PM in Budgeting & bank accounts 4 replies 154 views

throughtheblue

I imagine this has been done to death...

I've been saving up for a first time house purchase, but I'm currently waiting to see what happens with the market. Realistically, it could be 6 - 12 months before I were to buy, but with the increase in mortgage rates that could be longer unless property depreciated at a similar/bigger percentage. 

I've held off from switching before the hike in mortgage rates, but I feel tempted to get a few switch bonuses, which would also allow me access to some other saving products. 

I'm wondering how much of an impact it will have on a mortgage application given my circumstances. 
- I've had my current 'current' account for 3 years.
- I regularly pay into Help to Buy ISA
- Have possibly enough for deposit in an Instant Access Savers
- Can download my statement history over the last 3 years

I'm just wondering, with the saving products I have and regular payments into them, would this mitigate the impact of switching? 

penners324

Open another account with your bank and switch that. If your credit history is ol then a few switches will have a negligible impact 

throughtheblue

penners324 said:

Open another account with your bank and switch that. If your credit history is ol then a few switches will have a negligible impact 

I believe my credit history is good.
Would making a secondary current account not create an unnecessary credit search on my file before switching, or would it be more advantageous to keep my current 'current' account. 
Thanks

Ebe_Scrooge

A basic current account (i.e. one with no overdraft facility) will sometimes involve a search, but not always.  But in either case, a single credit search will not make one jot of difference - especially if you're not looking to apply for a mortgage for several months.

Daliah

throughtheblue said:

I believe my credit history is good.

You sound uncertain. Have you checked all 3 credit files? https://www.moneysavingexpert.com/loans/check-free-credit-report/

throughtheblue said:

Would making a secondary current account not create an unnecessary credit search on my file before switching, or would it be more advantageous to keep my current 'current' account. 

Most banks carry our hard credit searches if you apply for a current account, though some don't. Halifax, for instance, don't carry out a hard search when you apply for a second or subsequent current account. Starling Bank and Monzo don't carry out any hard search at all.

You then need to consider a 2nd heard search for the account you switch into, unless you already got the account you want to switch into.

There are articles on the main MSE site which talk about credit searches, and the credit reference companies also have information about it on their websites. Hard searches get registered with 1, 2 or all credit reference agencies, and they have different retention periods, between 6 months and 2 years. Lenders can see these hard searches, together with an indication of what kind of credit you applied for (current account, credit card etc). Whether you mortgage provider will be fazed by a current account application, only they know, and they may or may not tell you whether they would hold it against you. I am serial current account applicant and am of the view that half a dozen hard searches for current accounts make no difference to your creditworthiness but then, I have never put it to the test with a mortgage application. I think the general consensus is that you should avoid hard searches if you are within 6-12 months of applying for a mortgage. Only you can tell whether you want to risk it but if you do please report back how your mortgage application went.