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Updated: 10 Jul 2019

New tools by Experian and Compare the Market check your mortgage eligibility

New way to see if you can get a mortgage without harming your credit score

Aspiring homebuyers will be able to check how likely they are to be approved for a mortgage without harming their credit scores, with new tools launched by Experian and Compare the Market.

The credit reference agency and comparison site, which launched their new initiatives within weeks of one other, will allow people to perform a 'soft search' to figure out where they stand before they apply for a mortgage or embark on a property hunt.

Which? explains how the new mortgage eligibility tools work, why they are important and what you can do to improve your mortgage chances.

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How does Experian's mortgage eligibility tool work?

Experian's mortgage eligibility checker takes the information you fill in about your household income, address history and financial commitments and compares this to lender's criteria and credit reference information held about you.

The tool will be able to check your mortgage eligibility with seven lenders including Aldermore, Barclays, The Co-operative Bank, Coventry Building Society, The Family Building Society, Leeds Building Society and West Bromwich Building Society.

It will display the mortgages where you have the best chance of being accepted, as well as deals for which it isn't able to provide this information. Helpfully, it will also tell you if a lender would not be able to lend you the amount requested.

The service lists the products available from each lenders to aid your comparison. But keep in mind the eligibility rating is meant to show your likelihood of being accepted by the lender, rather than for the specific product.

The Experian tool will let you search fixed, variable and tracker rates but you won't be able to compare interest-only, buy-to-let or lifetime mortgages - or those targeted at government schemes such as Help to Buy.

Your check will be recorded as a 'soft search' on your credit report, but only you see this rather than lenders. The check won't affect your credit score and you can get a good idea of where you stand and what you need to do to improve your mortgage chances.

How does the Compare the Market mortgage eligibility tool work?

The Compare the Market Mortgage Eligibility Checker works in a similar way. It asks for a few personal details to calculate how much you will be able to borrow and whether you're a good fit for a range of lenders.

You'll need to input information like your household income, address history and financial commitments. Compare the Market will match this data with the affordability and eligibility criteria of lenders on its panel.

The tool can check your eligibility with eight lenders including The Family Building Society, Leeds Building Society, Platform, Skipton Building Society, Accord Mortgages, Coventry Building Society, West Bromwich Building Society and Yorkshire Building Society.

Rather than providing a rating and a list of products like Experian, Compare the Market prepares a summary of the lenders you might be able to borrow with and the range of borrowing you could achieve.

Again this will only be a 'soft search', so lenders won't see it on your credit file and it won't impact on your credit score.

What you need to watch out for

Both eligibility tools can be used by first-time buyers, home movers or those looking to remortgage for a single or joint application, but they aren't currently set up to help those looking for a buy-to-let deal.

The eligibility guidance provided by Experian and Compare the Market is only available for a selection of lenders, so there could be other providers in the market that would be likely to accept your application.

Keep in mind that the tools won't look at whether the mortgage is suitable for you and your financial needs. So while the eligibility check is useful, it should only be one of steps in your research on mortgage deals.

What's the point of these tools?

Research from Compare the Market suggests many are too pessimistic about their mortgage borrowing options, which may be putting people off pursuing their home-owning dream.

It found nearly one third (30%) of UK adults don't think they are eligible to borrow money through a mortgage.

When asked to predict how much money they could borrow through a mortgage, over half (58%) weren't confident in providing an answer. Those who did weren't optimistic, with 16% thinking they couldn't borrow more than £50,000.

With average house prices estimated at £225,621, this suggests a real lack of confidence about buying a home. Just 12% in the survey said they could see themselves securing a mortgage large enough to cover a house at the average national price.

However, Compare the Market found through its Mortgage Eligibility Checker that 45% of customers that carry out a search are able to borrow what they requested or even more, while 28% would end up with the green light for a lower borrowing amount.

Just 16% of customers were not eligible or not able to afford a mortgage and 6% did not have a sufficient credit history for the tool to be able to check. Additionally, 20% of customers that used the tool would not be able to afford or be eligible to remortgage.

Should you use a mortgage eligibility tool?

Applying for a mortgage can be a daunting experience, even if you've done it before.

It's hard to know if you will be eligible for a deal and if a lender is willing to lend you what you need to borrow.

A soft search is a great way to find out how much you can borrow and if you are likely to be accepted for a mortgage, but until now you would have needed to deal with lenders individually.

So, the new range of mortgage eligibility tools can help save you time and give you a snapshot of where you stand with certain lenders.

It's also a great way to avoid having to go through a hard credit check.

A hard credit search leaves a footprint on your credit report which other lenders can see. When you have too many of these, it can lower your score and reduce your chances of getting credit in the future.

How to improve your mortgage chances

If the mortgage eligibility tools show that you don't have a very good chance of being accepted, it's a good opportunity to try improve your financial situation. Here are some tips you can try:

Save a bigger deposit - you'll need a deposit of at least 5% of a property's value to get a mortgage. The more you save, the greater the range of products you can choose from. Lenders tend to like borrowers with a bigger deposit as it means the deal is less risky for them.

Check your credit report for errors - you'll need to pass a credit check when you apply for a mortgage, so you should check your credit reports with Experian, TransUnion (formerly Callcredit) and Equifax don't contain any errors.

Boost your credit score - the higher your credit score, the better your chances of being approved for a mortgage. Simple steps like registering on the electoral roll can improve your rating. Find out more in our guide on how to boost your credit score.

Consider a broker - a mortgage broker has expert knowledge of the mortgage market and can help advise you on the best deal for your situation.