Mortgage Lending Criteria

Lending Criteria for a Mortgage

Every mortgage provider is different! A mortgage broker’s job is to know where to place your business for the best possible fit for your specific circumstances. Your broker will assess your application based on the following factors:

Age

You must be over 18 to apply for a mortgage from any UK lender (some require a minimum age of 20 or 21). Many lenders also have an upper age limit at the end of the mortgage term. For instance, if the limit is 75, a 50-year-old can get a 25-year mortgage, while a 60-year-old can only get a 15-year term.

Income

Some lenders impose a minimum income requirement, ranging from £10,000 to £25,000. However, whether or not they have this threshold, you will still need to pass an affordability assessment based on the mortgage amount you’re applying for. Many lenders do not accept foreign currency income.

Employment Status

Your employment status may limit your options, but it won’t typically disqualify you from getting a mortgage. For example, applicants on zero-hours contracts may have fewer choices, and some lenders may not accept those who have been employed for less than 12 months.

Deposit

Most lenders require a minimum deposit of 5%, but this can rise to 10% or 15%, especially for new builds or flats. The deposit requirement may vary depending on whether you’re purchasing a flat or house or if it’s a new build versus an older property.

Deposit Source

The origin of your deposit matters. If it’s saved from your income, lenders won’t usually have an issue. Gifted deposits from family members are generally accepted, but loaned deposits are typically rejected unless they are part of a formal agreement that fits into your affordability assessment.

Debts

Lenders will ask for evidence of your monthly outgoings, including any debts. They calculate your debt-to-income ratio to determine the portion of your income spent on existing commitments. Typically, lenders accept ratios between 25% and 50%.

Credit History

Lenders will check your credit history to review your current debts and how well you’ve managed credit in the past. Some lenders may accept applicants with minor credit issues (e.g., late payments), while others will reject applicants with severe issues such as recent bankruptcy.

What Happens If You Don’t Meet the Criteria?

Even if you don’t meet a specific lender’s criteria, there is enough variation between lenders that you’re likely to find one that will consider your application. Our brokers at Mortgage One regularly deal with enquiries about:

• Older Borrowers: Some lenders will accept borrowers up to age 75, provided they have sufficient income to cover repayments. Options like retirement interest-only or lifetime mortgages may also be available.

• Self-Employed Borrowers: While being self-employed can make it harder to secure the amount you need, many lenders will still consider your application. A broker can guide you to lenders who are more flexible.

• Bad Credit Borrowers: Credit policies can vary widely, so even with a bad credit history, a broker can help you find a lender willing to consider your circumstances.

Buy-to-Let Lending Criteria

For buy-to-let mortgages, lenders focus more on the property’s expected rental income and your experience as a landlord than on your personal income or debt levels.

Mortgage Affordability

Even if you meet the eligibility criteria, you’ll also need to pass an affordability assessment to determine how much you can borrow. Lenders typically use income multiples (e.g., 4.5 times your income). However, being eligible for a mortgage doesn’t necessarily mean you can afford one, and affordability depends on your individual financial situation.