Do I qualify for a mortgage?
There’s a lot to get your head round when you’re applying for a mortgage for the first time. Read this guide to find out if you qualify for a mortgage.
Key takeaways
Your lender will carry out an affordability assessment which looks at your income, outgoings and spending habits
You will normally need a deposit of at least 5% of the property value to qualify for a mortgage
Your credit rating, which is largely influenced by how you have handled your finances in the past, will impact whether you qualify for a mortgage, and the mortgage interest rate you receive
When you apply for a mortgage, the lender will assess whether the property is mortgageable and worth the amount you are paying for it
To find out if you qualify, our mortgage affordability calculator will show you your maximum borrowing chances and what property price range you could afford.
How likely am I to qualify for a mortgage?
You will only qualify for a mortgage if you’re over 18 and the lender is confident you can repay the mortgage.
Mortgage lenders look at various factors when assessing your application. These include:
Your income
How affordable the mortgage is
Your credit history
Deposit size
Most lenders also have rules about the maximum age you can be when the mortgage is due to end.
What affects mortgage eligibility?
Being eligible for a mortgage as a first-time buyer depends on a range of factors – the most important one is affordability. This is because the lender wants to be as sure as possible that you will repay the loan.
To assess affordability, a mortgage lender will look at:
How much you’re looking to borrow
The size of your deposit
Your outgoings, including debt repayments
Your spending habits
Your income and employment status
Your credit rating - check yours for free with our credit monitoring tool.
The mortgage lender will also want to check the property you’re buying is suitable security for the loan. It will carry out a valuation to check the property is worth the purchase price and that it is habitable and has ‘good title.’
If the property is leasehold, the lender will also look at ground rent and service charges.
Do I count as a first-time buyer?
A first-time buyer is someone who is purchasing a residential property for the first time and has never owned one before, either in the UK or anywhere else in the world.
It’s important to know whether you are a first-time buyer or not as first-time buyers will be eligible for first-time buyer mortgages, as well as cheaper stamp duty rates.
The term ‘first-time buyer’ is actually a bit deceptive as it’s not whether you’ve bought a property that counts, but whether you have ever owned one. You WON’T count as a first-time buyer if:
You’ve ever owned a property before, either in the UK or elsewhere.
You’ve sold a home and now live with your parents
You had a joint mortgage with a partner that you’re no longer with
You’re buying with someone who owns, or has previously owned, a home
Your parents, a guardian or another benefactor bought a home for you, but you own it
You inherited a home that you own or have owned in the past, even if you’ve never lived there
You intend to let the property out
What do lenders look at when considering a mortgage application?
Lenders look at a range of factors, including your deposit, income, outgoings, credit history and employment status, when considering a mortgage application.
Exact requirements differ between lenders, and also between different mortgage products. Here’s what lenders will look at:
The size of your deposit
The more you can put down, the better. The percentage of the property’s value you are borrowing as a mortgage is known as the loan-to-value ratio (LTV).
If you’re putting down 20% of the value of the property as a deposit, your LTV would be 80%. The lower your LTV, the better the mortgage deals you’ll be eligible for.
Your outgoings
Lenders look closely at your regular outgoings (household bills, childcare payments, debt repayments etc) and how you spend your money. You usually need to provide three to six months’ of bank statements.
Income
If you’re employed, you’ll need to provide three to six months of payslips, and maybe a copy of your employment contract.
If you’re self employed you’ll normally need to provide at least two years’ worth of certified accounts or tax statements. In either case, if you also have an income from investments or benefits, you’ll need to prove this too.
Your credit score
Your credit score is largely determined by how you’ve managed credit in the past. The higher your credit score, the more likely you are to be accepted for a mortgage, and at better rates.
Your age
You need to be 18 or above to get a mortgage with any lender. Most will also have an upper age limit – this applies to the age when you expect to have paid off the mortgage in full.
Stress testing
Tighter mortgage lending regulations mean that lenders now carry out ‘stress tests’ on your finances. This means they’ll check whether you’ll still be able to afford the mortgage if your circumstances change or if interest rates go up.
Joint buyers
If you’re buying with someone else, your lender will look at all of the above for them too. Joint buying with someone with a poor credit record will make it less likely you get a competitive mortgage deal.
How much can I borrow as a mortgage?
As a rule of thumb, lenders are usually prepared to lend about four times your income (or joint income if you buy with someone else).
But this varies between mortgage providers – some will lend a lot more, especially if you are in a profession with a natural career progression and set pay rises.
Although income is important, affordability is usually more important. If you have a lot of regular outgoings such as childcare costs, school fees or debt repayments, you won’t be able to borrow as much as someone on the same salary without these financial commitments.
Find out how much you'll be able to borrow with our mortgage affordability calculator.
What can I do if my mortgage application gets rejected?
If your mortgage is rejected, ask the lender why – then take appropriate action. For example, if your credit score wasn’t high enough, there are various things you can do to boost your score.
You can get tips for improving your credit score when you sign up for our Credit Score service. If your debt repayments are too high, try and pay down your debts and don’t borrow any more money if possible. If the mortgage amount was too high, try and save a bigger deposit.
Don’t rush to reapply - making multiple applications in a short timeframe could damage your credit score and make it harder to get approved for a mortgage in the future.
Tips to improve your credit score for mortgage applications
Improving your credit score is one of the most important things you can do to boost your mortgage eligibility. Simple steps you can take to improve your credit score include:
Get on the electoral roll
Pay your bills on time
Don’t use all your available credit
Close any unused credit card accounts
Work on building your credit history
Don’t use payday loans or gamble online
Need some more help? Read our full guide for improving your credit score.
Will I pay stamp duty as a first-time buyer?
Yes, you need to pay stamp duty as a first-time buyer if the property is over £300,000.
If you’re buying a property priced in excess of £300,000, use our stamp duty calculator to check what you’re obliged to pay.
Compare mortgages with MoneySuperMarket
Looking for first-time buyer mortgage to take your first step on the property ladder? Or perhaps you're looking to remortgage?
Either way, it’s easy to find and compare mortgages from a range of leading lenders with MoneySuperMarket.
Whether you’re looking for a fixed-rate, a tracker, or a discount mortgage, our mortgage comparison tool can help you find a great deal for you.
We’ll just ask you a few questions about the property you’re looking to buy or remortgage and how much you’ll need to borrow.
We’ll then show you results including the initial interest rate and your monthly repayments and any product fees you’ll be asked to pay.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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Collette Shackleton
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Collette Shackleton is a highly skilled Content Writer who has over nine years’ experience creating helpful and engaging personal finance content for consumers. Collette shares her experience as a...
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Emma Lunn
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Emma has written about personal finance for almost 20 years, with a career spanning several recessions and their inevitable consequences. Emma’s main focus is helping people learn to manage their...
