A new tool to help potential borrowers check if they are eligible for a mortgage without damaging their credit record has been launched by comparethemarket.com.
The eligibility checker comes as research suggested nearly one third of UK adults did not think they would be eligible to borrow money for a mortgage.
On top of this, the majority of adults had not taken any steps to improve their eligibility and did not ‘soft check’ how much they could borrow before applying.
Instead many mortgage-seekers only discovered they would not be eligible for a mortgage after their application was declined. Indeed, almost half of those who were turned down said their credit score was negatively impacted as a result.
Factors such as their income being too low were among the reasons they were turned down. But, for others, having too much debt, carrying too many credit applications or having a generally poor credit history were the cause of the rejection.
Soft check
Now comparethemarket is hoping would-be borrowers will be able to learn more about their chances of taking out a mortgage, whilst also reducing their chances of damaging their credit file with a hard search, with its Mortgage Eligibility Checker. It carries out a ‘soft check’ on their finances, which does not impact their credit rating.
It asks for fewer personal details in order to calculate the amount required to borrow and assess eligibility, which means users will be able to have more information when comparing mortgages or speaking to an estate agent.
Small changes can improve eligibility
Shakila Hashmi, head of money at comparethemarket.com, said: “Borrowers should be aware that even small changes, such as registering on the electoral roll, taking out a credit card, paying off debt or simply saving more regularly can significantly increase their chances of securing a mortgage.”
She added: “Our mortgage eligibility checker allows customers to check whether and how much they can borrow, before making an application.
“In some cases people may find they are not eligible for a mortgage at the time of checking, but a soft check does not impact your credit rating and allows you to make the changes necessary to help secure a mortgage at a later date.
“This is particularly beneficial to first-time buyers who have not been through the home buying process before, but equally beneficial to remortgagers who may be looking to take out some funds for home improvement or get on to a better rate.”
Comparethemarket also said it would be enhancing the tool further to allow customers to see mortgage product rates from lenders who have indicated they might be willing to loan them the amount for which they are eligible. This will provide details of the likely monthly repayment amount as well as fees.
