Securing a mortgage is one of the most significant financial decisions most people will make in their lifetimes. Whether you’re a first-time buyer, moving house, remortgaging, or investing in property, understanding whether you can get a mortgage is a crucial step in the home-buying process. We’ll explore the various factors that lenders consider and explain how a mortgage broker can help you navigate the process.Â
Understanding What a Mortgage Is
A mortgage is a loan secured against a property, typically used to buy a home or other real estate. The lender provides you with the funds to purchase the property, and in return, you agree to repay the amount borrowed with interest over an agreed term. If repayments are not maintained, the lender can reclaim the property.
Who Can Get a Mortgage?
Mortgage lenders assess your financial situation and circumstances to determine whether you meet the criteria for a mortgage. There is no one-size-fits-all answer, as eligibility varies depending on factors such as employment status, income, credit score, deposit size, and the type of mortgage you are applying for.
First-Time Buyers
If you’re purchasing your first home, lenders will look at your current financial position, including income, credit history, and available deposit. First-time buyers may also be eligible for government schemes designed to assist with purchasing a first home, which can improve your chances of obtaining a mortgage.
Home Movers
If you currently have a mortgage and intend to move, you might be able to transfer your existing mortgage to the new property (known as porting) or apply for a new one. Your current financial circumstances and any changes since your last mortgage approval will be considered.
Remortgaging
Remortgaging involves switching your current mortgage to a new one, either with your existing lender or a new one. Reasons for remortgaging include securing a more competitive rate, borrowing more money, or changing mortgage terms. Lenders will review your repayment history and financial stability before approving a new deal.
Buy-to-Let Buyers
Those purchasing a property with the intention of renting it out will need a buy-to-let mortgage. These usually require a higher deposit and involve different affordability checks. The potential rental income is typically factored into the lender’s assessment, along with your personal financial situation.
Factors That Affect Mortgage Eligibility
Lenders use several criteria to determine whether you can get a mortgage. Below are the key areas reviewed during the application process:
1. Income and Employment Status
Your income is a primary factor in determining how much you can borrow. Lenders look for consistent and reliable earnings that suggest you can comfortably meet your mortgage repayments. They will assess different employment types as follows:
- Employed: Payslips, employment contracts, and bank statements are used to verify income.
- Self-employed: You may need to provide two to three years of accounts, tax submissions (SA302s), and potentially projection statements from an accountant.
- Contractors or zero-hour workers: Lenders may consider average income over the contract period or prior year, depending on regularity and reliability of income.
2. Credit History
Your credit report shows how you’ve managed debts in the past, including loans, credit cards, and any existing mortgages. Lenders use your credit history to assess your reliability in repaying borrowed money. Some issues that could affect your application include:
- Missed or late payments
- Defaults or County Court Judgments (CCJs)
- Outstanding debts
- High credit usage
- Bankruptcy or Individual Voluntary Arrangements (IVAs)
That said, some lenders may consider applicants with a less-than-perfect credit history, depending on the severity and timing of issues and how your overall financial situation looks today.
3. Deposit Size
The size of your deposit plays a key role in determining your eligibility for a mortgage. Typically, the more you can put down upfront, the lower the risk to the lender. Loan-to-value (LTV) ratio is the term used to describe the percentage of the property’s value that you’re borrowing versus what you’re putting down as a deposit. For example:
- 5% deposit = 95% LTV
- 10% deposit = 90% LTV
- 25% deposit = 75% LTV
A lower LTV often gives access to a wider choice of mortgage deals and more favourable interest rates.
4. Monthly Outgoings and Existing Financial Commitments
Lenders assess your full financial picture, including regular outgoings such as:
- Utility bills
- Loan repayments (car finance, personal loans)
- Childcare costs
- Credit card balances
- Subscription services
These are compared against your income to determine your affordability, often through a stress-testing process that ensures you could still make repayments if interest rates were to rise.
5. Age and Mortgage Term
Age can influence both eligibility and the available term length of a mortgage. Most lenders set an upper age limit, either at the time of application or by the time the mortgage term ends. For example, some lenders may restrict borrowing to those under 70 by the end of the mortgage term, though others may be more flexible depending on circumstances, especially where retirement income is considered.
6. Property Type
The type and condition of the property you’re purchasing can influence whether a mortgage is approved. For example:
- Non-standard construction (e.g., timber, concrete)
- Flats above commercial premises
- New builds with high ground rent charges
These may be considered higher risk by some lenders, meaning additional checks or restrictions could apply.
What Documents Are Needed for a Mortgage Application?
When applying for a mortgage, you’ll typically need to provide documents to prove your identity, income, and expenditure. These can include:
- Proof of ID (passport or driving licence)
- Proof of address (bank statements or utility bills)
- Payslips or self-employed accounts
- Bank statements (usually 3 months)
- Credit reports
- Details of existing financial commitments
Having these to hand can help the process progress as smoothly as possible.
Can I Get a Mortgage with Bad Credit?
Having a poor credit history doesn’t necessarily mean you can’t get a mortgage, though it may limit your options. Some lenders specialise in helping those with adverse credit, and may consider:
- How recent the credit issues were
- Whether they were one-off events or repeated behaviour
- If the issues have been resolved
- How you’ve managed your finances since
A mortgage broker can help you assess your current position and identify mortgage deals that align with your circumstances.
Affordability Assessments
Lenders must ensure that a mortgage is affordable both now and in the future. Affordability is assessed using two primary methods:
- Income multiples: Traditionally, lenders might offer up to 4-5 times your income, depending on the lender and the overall financial situation.
- Detailed affordability assessment: This involves a more in-depth look at your income, expenses, and spending habits to determine how much you can borrow.
Affordability models may vary between lenders, which is why using a mortgage broker can help you explore and compare available options that suit your scenario.
How a Mortgage Broker Can Help
A mortgage broker can support you throughout the mortgage application process by helping you gather necessary paperwork, assessing your affordability, and explaining mortgage types and key terminology. By understanding the criteria that different lenders use, brokers can help you identify mortgage deals that are most suited to your financial situation and goals.
Using a broker can also help reduce the amount of time and effort required when comparing options, especially if you’ve got unusual circumstances such as being self-employed, having adverse credit, or requiring a specialist mortgage type.
Common Reasons for Mortgage Rejection
Even if you meet the income and deposit requirements, your mortgage application could still be rejected. Common reasons include:
- Low credit score or recent defaults
- Unstable income or employment history
- High existing debt levels
- Too small a deposit
- Concerns over the property being purchased
- Application errors or inconsistent documentation
To help reduce the risk of rejection, it’s important to prepare your finances, check your credit report, and work with a mortgage broker to present your application as accurately and completely as possible.
Improving Your Chances of Getting a Mortgage
While there are no guarantees, here are some practical steps that may help increase your likelihood of mortgage approval:
- Save for a larger deposit
- Check and improve your credit score
- Register to vote, which helps verify address and identity
- Reduce existing debts
- Avoid applying for other types of credit in the months before your application
- Ensure your income is stable and well-documented
Whether you can get a mortgage depends on a variety of factors, from your income and credit history to the type of property you’re looking to buy. For many people, the process can be complex, especially when there are additional considerations such as self-employment or previous financial difficulties.
A mortgage broker can offer tailored support to help identify suitable mortgage options based on your unique circumstances. They can also guide you through the documents and checks involved in the application process, helping to make the journey as manageable as possible.
Being informed, prepared, and supported can make a significant difference in how smoothly your mortgage application progresses. If you’re unsure whether you can get a mortgage, exploring your options with professional guidance is a sensible first step.