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  1. Guides
  2. How to get approved for a mortgage
Mortgages
Mortgages
Last Updated 06 December 2021

How to get approved for a mortgage

GetAgent Team
  1. Can I afford to buy a house?
  2. 2
  3. 3
    How to apply for a mortgage
  4. 4
  5. 5
  6. 6

The UK housing market has never been so competitive. The average UK house price is (at the time of writing) £264,244. That’s 10% higher than this time last year, and nearly 3% higher than last month alone.

If you’re looking to get on the property ladder, you’ll need to know the ins and outs of home loans. But how can you get approved for a mortgage? In this guide, we’ll cover the key aspects behind mortgages, interest rates, approval techniques and more.

1 - Save for a deposit

You’ll need to set aside money each month for a deposit to demonstrate you’re responsible with managing your finances. Crucially, make sure it isn’t borrowed money. Banks and lenders won’t let you use a smaller loan to secure a larger one.

When it comes to deposits, the bigger the better. Using schemes like Help to Buy ISAs and 95% mortgages can help you maximise the power of your deposit.

Increase the size of your deposit

Generally the larger your deposit the cheaper your mortgage rate will be.

2 - Increase your chances with tidy finances

Tightening your belt is good advice at any time, but it’s vital in the 3-6 months before you apply for a mortgage. Banks will check your finances, so it’s important to get ahead and look your best on paper. Having some existing loans on things like credit cards, phones or cars is fine - it helps show you’re a capable borrower. But, banks become worried if your income is tied up in direct debits and loan payments.

You can improve your chances and increase your credit score by:

  • Ensuring that you pay bills and debts on time
  • Reducing your outstanding debt as best you can.
  • Closing old accounts
  • De-linking accounts with previous partners or old flatmates
  • Registering to vote
  • Making sure the addresses on your credit report are consistent.

Go one step further and find an expert estate agent who can help you find properties in up-and-coming neighbourhoods. They’ll also be able to help you navigate the rest of the buying process.

3 - Shop around

See what deals the market has to offer, they are competing for your business so you’re likely to find a good deal if you spend a bit of time researching.

4 - Confirm your affordability

The next step in getting approved for a mortgage is confirming your affordability. Lenders will ask questions about your finances and existing assets to your name. Some typical checks include:

  • Reviewing the last three months of your income
  • Reviewing your expenditure and spending habits
  • Whether you have existing properties
  • Whether you have or want children (or other dependents)
  • Where your deposit came from

If you’re making a joint application (with a partner, business associate, or friend or family member), the lender will also ask about them.

You’ll need to decide for how long you’d like to borrow. 25 years is the traditional term length, but longer (and shorter) ones are available. Although your monthly payment may decrease, your total will go up with the interest.

Once they’ve assessed your finances and approved your application, you’ll receive an ‘agreement in principle’ (AIP) document, specifying the limit you’re approved to borrow.

5 - Give accurate answers

Inaccurate or inconsistent information can delay the process while plainly wrong information can land you in trouble. Follow the steps below to make sure your application is accurate:

  • Have your employment records ready
  • Make sure you have details and dates for previous employments
  • Give your full name or make sure its consistent on everything
  • Declare your debts
  • Make sure to have your 3 years address ready with correct dates and postcodes
  • Make sure income figures are correct and include any bonuses if applicable
  • Make sure your proof of funds and deposit is accurate
  • Make sure your payslips align with the dates asked for

6 - Make a sensible offer on a property

Once you’ve found a place you’d like to live, put in an offer. If it’s accepted, your estate agent will work with the seller’s estate agent or solicitor and take care of the paperwork and transfer the deed.

Remember, your mortgage application is tied to your ability to pay it back, so make sure your offer is sensible. If you make an offer that’s far higher than the valuation to win the seller over, your approval chances with the bank may decrease.

Your bank may also perform some final checks on the property before everything’s complete, such as conducting an independent evaluation or checking the home report once more.

If the bank finds that the property is overvalued, they may adjust your mortgage offer. In that case, you may need to adjust your deposit to make the gap.

Requirements for mortgage approval

To get approved for a mortgage you need the following 7 things:

  1. Proof of income and funds
  2. Proof of assets
  3. A good credit rating
  4. Proof of employment
  5. Proof of identity
  6. Valuation of property from the lender
  7. Deposit

What can lower your chances of getting a mortgage approved?

Switching Jobs

Someone in long term employment looks like a more secure prospect to a lender than a borrower who has only recently started a job or changes work regularly. If you’re looking to move jobs, it might be worth focusing on securing a mortgage before making the transition.

Making any major purchases

A potential lender wants to see evidence of frugality. Hold off purchasing a car, major appliance or any expensive furniture until you secure a loan.

Taking any unpaid time off

Demonstrating that you are a reliable employee will help potential lenders see that you are a committed earner who can confidently make loan repayments.

Opening or increasing any liabilities

Increasing your debt by opening any new liabilities will make you appear even more untrustworthy to potential lenders.

Mortgage affordability

What mortgage can I get with my salary?

A rough guide to determine your mortgage affordability is multiplying your annual income by 4 or 4.5.

For example, on an average UK salary of around £26,000 you would be able to borrow between £104,000 and £117,000. If you and your partner are on the same wage as before, you would be able to borrow as much as £234,000.

Though this method gives an estimation of how much a bank will loan you, it ignores other factors. For example, banks may allow you to borrow more if you change your mortgage term length or interest rate.

How much mortgage can I afford?

How much mortgage you can afford depends on your current financial situation. Instead of paying rent, buying a house with a mortgage requires monthly repayments. When it comes to outgoings however, repayments are just another sum of money leaving your bank account every month. With this logic, you want your repayments to roughly match the amount of rent you usually pay. Otherwise, you might end up unable to continue the standard of living you’re used to.

Mortgages with longer terms have lower monthly repayments because the mortgage is spread out over a longer period of time. For example, a couple that wants a £350,000 property could feasibly get a £315,000 mortgage with a £35,000 deposit. This type of loan (with an interest rate of 2% and a term of 25 years) would require monthly repayments of £1,335.14. Split between two, this would equal £667.57 each a month.

So, if you can afford £667.57 a month, and you’re looking to get a mortgage with a partner, you could afford a property worth £350,000.

Please note: Mortgage calculations change all the time and the above is not a reflection of current mortgage rates, but an example for educational purposes.

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How to calculate how much mortgage you can borrow

There are four ingredients when calculating your mortgage affordability: the

  1. Mortgage sum
  2. Mortgage length
  3. Your monthly payment
  4. The interest rate

The final figure is based on how much you can afford based on the details you provided previously.

There are mortgage calculators available online that can help you play around with the numbers before you apply with the bank.

Summary

Join the millions of other UK property owners and get the keys to your very first home with simplified mortgage approval.

We’ve outlined the process you should follow to save for a deposit, get your finances in shape and confirm your affordability with the bank before making a bid. Before you know it, you’ll be able to intelligently navigate the market to find a great mortgage deal and be on your way to a new home!

FAQs

How long does mortgage approval take?

Getting a mortgage approval (AIP document) can take as little as 24 hours, but can take longer if you need to do things like close accounts and submit accurate information.

Getting your mortgage approved (in full) can take between 3-6 months, however, this includes everything from tidying your income statements to correcting information on your credit file.

Mortgages on their own can take between 1-2 weeks after you’ve put in a house offer, sometimes longer if your bank makes additional checks on the property.

Is it hard to get approved for a mortgage?

Yes and no. While there are lots of steps and paperwork involved with securing a mortgage, there are also lots of resources to help you understand how to maximise your chances of approval.

Some things like providing inaccurate or incomplete information on documents can lengthen the approval process. Too many recent applications can also place needless barriers in your way, so it's essential to take slow, careful steps.

What credit score is needed to buy a house?

There isn’t a minimum credit score required for mortgages as every credit agency gives slightly different ratings, so it can be hard to make definite judgements.

Higher scores are better, in general. However, if you have a lower credit score, banks will still consider your mortgage application if you show signs of managing your money well. Financial metrics like low debt usage and a proven history of borrowing responsibly are key.

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How to apply for a mortgage
More mortgages guides
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