Research from comparethemarket.com has revealed that nearly one third (30%) of consumers do not think they would be eligible to borrow any money in the form of a mortgage. Nearly 13 million people are estimated to be affected, as exclusive polling reveals that many applicants do not take the necessary steps required to boost their eligibility and 62% of respondents have never checked how much they could borrow via a soft check before applying. Soft checks do not impact your credit rating, which is a key measure when a lender decides whether you are eligible for a mortgage.
The majority (74%) of UK adults admit that they have not made any attempt to improve their credit rating in order to improve their chances of securing a mortgage. Less than one in ten respondents say that they have taken out a credit card, paid off their existing card or overdraft debt, added themselves to the electoral role or increased their household income to better their credit rating.
When asked to predict how much money they could borrow via a mortgage, over half (58%) were not confident in their ability to respond correctly. However, respondents who did predict were not optimistic, as over one in ten (16%) do not believe that they could borrow more than £50,000. With the average UK house price estimated at £225,621, these pessimistic predictions indicate a lack of consumer confidence, with only 12% of respondents able to envisage themselves securing a mortgage large enough to cover a house at the average national price.
Mortgage-seekers whose applications were declined say that they have suffered the consequences. Almost half (45%) who were turned down say that their credit score was negatively impacted as a result. When questioned on their providers’ reasons for declining their application, one third (33%) said that their income was deemed too low. Other major factors included having too much debt, carrying out too many credit applications or having a generally poor credit history.
Commenting on the research, Shakila Hashmi, Head of Money, at comparethemarket.com said “Buying a home is one of the biggest financial commitments and it is crucial that borrowers are fully equipped with the necessary knowledge before they apply. 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.”