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Mortgage Eligibility

Mortgage Eligibility Guide

Ashton Berkhauer
Written by  Ashton Berkhauer
5 min read
Updated: 18 Mar 2024

Learn more about what mortgage lenders look at when deciding how much to let you borrow. Read ahead to discover all you need to know.

The mortgage eligibility checklist

Before you start dreaming of paint colours and patio furniture, it's essential to grasp what lenders are looking for:

  • Loan size: How much money you wish to borrow

  • Deposit: The amount you've managed to save to put down

  • Property type: Different properties carry different levels of risk, especially if it's a flat above cafes and bars

  • Employment status: Stability in your job is key

  • Credit rating: A measure of your financial reliability

  • Affordability: Can you comfortably manage the mortgage payments?

Each of these factors plays a significant role in the lender's decision-making process. They're not just arbitrary hurdles but rather a way for lenders to gauge the risk involved in lending to you.

Couple relaxing in their home

Deciphering affordability

When it comes to affordability, lenders aren't just taking your word for it. They require concrete proof that you can handle the financial responsibility of a mortgage. This proof comes in the form of:

  • Income evidence: Typically, lenders will ask for 3-6 months' worth of payslips

  • Additional income: Other sources, like government benefits or child maintenance, may also be considered

  • Spending habits: Expect a review of your bank statements from the past six months, scrutinising commuting and childcare fees, holiday, socialising, and hobbies expenses

  • Existing debts: Your current financial obligations, including credit cards, store cards, loans, car finance, catalogue credit accounts, etc., are taken into account

  • Interest rate buffers: Lenders will test if you can still afford the mortgage if interest rates rise, ensuring you can afford the mortgage now and in the future

This thorough assessment ensures that lenders are confident in your ability to maintain payments, even when faced with potential financial fluctuations.

The role of credit rating

Your credit rating is like a financial CV, providing a snapshot of your reliability and payment history. A better credit score not only opens the door to mortgage approval but can also unlock more competitive mortgage rates. Fortunately, using a mortgage eligibility check is a safe move that won't leave a mark on your credit score.

Proving you're mortgage-worthy

To prove your identity and financial standing, you'll need to gather a few key documents:

  • Identity verification: Passport, driving license, council tax bill, and recent utility bills dated within three months

  • Income proof: Recent payslips, evidence of any bonuses or commission, bank statements, and your latest P60

  • For the self-employed: Certified accounts, SA302 forms or tax year overviews for the past two or three years, evidence of upcoming contracts if you're a contractor, and evidence of dividend payments or retained profits if you're a company director

  • Spending patterns: Bank and credit card statements from the past six months

This paperwork trail is essential for lenders to verify your claims and assess your financial behaviour.

Your mortgage is secured on your home, which you could lose if you do not keep up your mortgage repayments.

How do I test my mortgage eligibility?

Before diving into the official application process, consider obtaining an 'agreement in principle'. This preliminary step can give you a good indication of your mortgage eligibility without the commitment of a full application. Be aware, though, that some agreements might involve a hard credit check, which could affect future credit assessments. Others may only conduct a soft check, which is less intrusive.

A good way to check whether you are eligible for a specific type of mortgage, even before submitting your ‘official’ application, is to ask for a mortgage in principle. By doing so, you can test if you’re likely to be approved and understand which types of mortgages you would qualify for.

Bear in mind, though, that some ‘agreement in principle’ applications come with a hard credit check. This means that it will show in future on your score and possibly have an impact on lenders’ assessment of your credit history. However, it’s not always the case, as some lenders will only perform a soft check.

While a mortgage in principle can give you a clearer picture of whether you may be eligible for a certain plan, it is no guarantee. What’s more, you will still need to go through the whole mortgage application process.

Am I still eligible for a mortgage if I have bad credit?

Even with a less-than-stellar credit history, obtaining a mortgage isn't out of the question. It's certainly more challenging, and you may face higher interest rates and the need for a larger deposit, but options are available for those with bad credit.

Checking eligibility with MoneySuperMarket

When you compare remortgage deals with MoneySuperMarket, we’ll ask you a few questions, including how much you want to borrow and what the value of your property is. This will allow us to show you the most relevant deals based on your loan-to-value, including mortgages from your current lender.

But if you choose to answer some additional questions, we can narrow down your results further and exclude those mortgages you won’t be eligible for. This will give you a better idea of the mortgages you can apply for.

We do this by checking the information you’ve provided against lenders’ basic eligibility rules. This way, we can exclude any mortgages where you don’t meet the minimum criteria.

This doesn’t mean you are certain to be accepted for the mortgages you see in the results table. However, it does mean you are eligible to go on to apply for these. The lender or mortgage broker will be able to advise you on your full mortgage eligibility.

Bear in mind that the amount a lender agrees to let you borrow will depend on its own lending criteria.

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