Mortgage Eligibility: Everything You Need to Know

Mortgage lenders have a set of criteria that borrowers must meet to be approved for a loan. Read on to find out what providers look for and how to qualify for a mortgage.

Brean Horne Last updated on 14 January 2022.
Mortgage Eligibility: Everything You Need to Know

Applying for a mortgage is a big financial commitment and you’ll need to tick a few boxes to be eligible for one. Lenders have different mortgage eligibility criteria, which you must get your head around before applying.

Whether you’re a first-time buyer or looking to buy your next home, we explain everything you need to know about mortgage eligibility and what documents you’ll have to show lenders to improve your chances of getting a loan.

Am I eligible for a mortgage?

Each mortgage lender has its own set of rules for assessing mortgage applications. These rules are often called ‘mortgage eligibility criteria’.

Although the requirements for lenders can vary, most will look at the following things when you apply for a mortgage:

  • Age: Most lenders have a minimum age requirement for a mortgage and a maximum age that they will lend to.
  • Income: Any wages, pensions, investments, bonuses, commission, benefits or maintenance payments that you receive.
  • Spending: Essential expenses, such as food, travel and childcare, and non-essential spending, such as holidays and leisure activities.
  • Debt: financial commitments, such as credit card, car finance, overdraft, loan, or buy now, pay later repayments.
  • Deposit: How much you have saved to put down as a lump sum.
  • Employment status: whether you are employed full-time, part-time, self-employed, unemployed, or retired.
  • Credit history: including your credit score and whether you have any county court judgments (CCJs), individual voluntary arrangements (IVAs) or have declared bankruptcy.

» MORE: 11 tips for first-time home buyers

What documents do I need to show to prove mortgage eligibility?

When you apply for a mortgage, a lender will ask for documents to prove and support the information that you give in your application and that you meet their eligibility criteria. The types of documents you’ll need to supply may differ depending on the mortgage provider, and your circumstances, but most will request a minimum of the following:

  • Proof of ID: You’ll need to provide legal documents, for example, a current passport or a full UK driving licence photocard, so that a lender can verify your identity.
  • Proof of income: Lenders will ask for bank statements and payslips to show evidence of any income from employment, benefits or other payments.
  • Tax forms: If you’re self-employed you’ll need to provide tax forms and your self-assessment tax returns (SA302) from the last two or three years along with business bank statements to prove your earnings.
  • Proof of deposit: You’ll need to show evidence of your deposit with bank statements or savings account statements. Lenders may ask you to complete a form if you use a gifted deposit.
  • Household bills: Mortgage providers ask for recent bills, such as energy, water or council tax, to prove your address.

» MORE: What you need to apply for a mortgage

Mortgage affordability checks

In 2014, the Financial Conduct Authority (FCA) introduced new rules to protect borrowers against poor mortgage lending practices. The new rules mean lenders have to carry out more extensive mortgage affordability checks before approving a loan.

These checks were designed to ensure that borrowers can comfortably afford mortgage repayments now, and in the future. Lenders will look at your income, outgoing and existing debt repayments to build a picture of how much you can afford to commit to mortgage repayments each month. Lenders conduct a hard credit check to see your track record for paying off debt as well.

Many mortgage providers also conduct a ‘stress test’ to check whether you’ll be able to keep up with repayments in the future should circumstances change – for example, if interest rates increased or if you decided to start a family.

» MORE: How much mortgage can I afford?

How long does it take for a mortgage application to be approved?

It can take between two to six weeks for a mortgage application to be approved. However, this can vary depending on the lender and complexity of your personal circumstances. Ensuring that you supply the correct documents on time for your application can help avoid any hold-ups with eligibility and affordability checks.

How to compare mortgage deals

It’s always worth using a mortgage repayment calculator to get a rough idea of how much you will be able to borrow before you start to compare mortgage deals. Once you have an estimated loan amount, you can start shopping around for the best offers for you.

If you are buying your first home or would like some support during the mortgage process, hiring a mortgage adviser or mortgage broker can help. They tend to have access to deals from a wider range of lenders, which can help them find the most suitable mortgage for your circumstances.

» MORE: Compare the latest mortgage deals

About the author:

Brean is a personal finance writer at NerdWallet. She covers a range of financial topics and has written for consumer titles including Which?, Moneywise and The Motley Fool. Read more

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