Knowing what lenders look at when assessing a mortgage helps you prepare and improve your chances. This guide explains what lenders look at: your income and affordability, credit history, deposit, outgoings, employment, the property, and your age and term, and how each affects their decision.
Your income and affordability
Central to any decision is your income and whether you can afford the mortgage, assessed through income multiples and a detailed affordability check including a stress test for rate rises, as our guide to mortgage affordability explains. So lenders look closely at how much you earn and whether the repayments are sustainable. Strong, evidenced, stable income is the foundation of a successful application and shapes how much you can borrow.
Your credit history
Lenders check your credit history to see how you have managed borrowing, looking for missed payments, defaults or other issues that suggest risk, as our guide to credit scores explains. A good credit history helps you access more lenders and better rates, while problems can limit your options. So your credit record is a key factor, and checking and improving it before applying is worthwhile.
Your deposit and the LTV
The size of your deposit, and so the loan-to-value, matters a great deal: a larger deposit means lower risk for the lender, more deals and better rates, while a small deposit limits your options, as our guide to loan-to-value explains. So lenders look at how much you are putting in relative to the property's value. A healthy deposit strengthens your application and improves the terms available to you.
Your outgoings and debts
Lenders assess your regular outgoings and existing debts, since these reduce the income available for a mortgage and affect affordability, so loans, credit cards and commitments all count, as our guide to affordability relates. So it is not just what you earn but what you spend and owe. Reducing debts and unnecessary commitments before applying can improve how lenders view your application and increase what you can borrow.
Your employment and income type
Lenders consider how you earn, as a stable, regular income is viewed more simply than variable, self-employed or complex income, which needs more assessment, as our guide to improving your chances relates. So the nature of your income, employed, self-employed, contractor or mixed, affects how it is assessed and which lenders suit you. Evidencing your income clearly, whatever its form, helps lenders lend with confidence.
The property and your age
Lenders also look at the property, checking through a valuation that it is suitable security and worth the price, and at your age and the term, ensuring the mortgage fits within their age limits, as our guide to the mortgage term explains. So the home itself and the loan's timeframe matter, not just your finances. An unusual property or borrowing later in life can affect the lenders and terms available to you.
An example of an assessment
Imagine two applicants with the same salary: one with a big deposit, no debts and clean credit, the other with a small deposit, several loans and a missed payment. The first will likely be offered more, at better rates, than the second, despite equal income, as our guide to how affordability is assessed explains. This example shows how lenders weigh many factors together, not income alone, when assessing an application.
Residency and your right to reside
Lenders also consider your residency status and right to live and work in the UK, as this affects their willingness and ability to lend, with some lenders catering for those with limited residency or for expats, as our guide to expat mortgages relates. So your residency can affect your options. Knowing this helps those with non-standard residency target suitable lenders rather than facing unexpected declines.
The type of property
The property itself matters: lenders prefer standard, mortgageable homes, and may be cautious about unusual construction, very small flats, properties with short leases, or those above commercial premises, as our guide to non-standard construction explains. So the home you choose affects the lenders and terms available. An unusual property can narrow your options, which is worth knowing before you commit to buying.
Joint applicants
For joint applications, lenders assess all applicants, considering their combined income but also all their debts, credit histories and commitments, so each applicant's position affects the whole, as our guide to joint mortgages explains. So one applicant's credit issues or debts can affect a joint application. Both applicants getting their finances in order strengthens a joint application and the terms you are offered together.
Why applications are declined
Common reasons for decline include insufficient affordability, credit problems, too small a deposit, unstable or unevidenced income, an unsuitable property, or simply applying to a lender whose criteria do not fit, as our guide to improving your chances explains. So many declines are avoidable with preparation and the right lender. Understanding these reasons helps you address them before applying, improving your likelihood of approval.
How to present yourself well
You can present yourself well to lenders by having clean, well-managed finances, a good credit record, a healthy deposit, low debts, clearly evidenced income, and an application to a suitable lender, as our guide to improving your chances explains. So much of how a lender sees you is within your influence. Taking steps to strengthen each factor before applying helps you present the strongest possible case.
Using a broker to match a lender
Because lenders differ in what they look at and how strictly, a broker who knows the market can match you to a lender whose criteria suit your circumstances, improving your chances and terms, as our guide to using a broker explains. So the right lender for you depends on your profile. A broker's knowledge of which lenders favour which circumstances is especially valuable for anyone whose situation is not entirely standard.
Putting it all together
Lenders build a rounded picture from all these factors, income, credit, deposit, outgoings, employment, the property and your age, so strength in several areas can offset relative weakness in one, as our guide to affordability relates. So no single factor decides everything. Understanding that lenders weigh the whole picture helps you focus on strengthening your overall position rather than worrying about one element alone.
Because lenders weigh the whole picture rather than any single number, the most reliable way to win approval on good terms is to strengthen every part you can, your income evidence, credit, deposit and debts, and then apply to a lender whose criteria genuinely fit your circumstances.
Seen this way, a mortgage decision is less a single hurdle and more the sum of several smaller ones, each of which you can prepare for in advance to put your application in the best possible light.
In short
Lenders look at your income and affordability (including a stress test), your credit history, your deposit and the loan-to-value, your outgoings and debts, your employment and income type, and the property and your age and term. Each affects their decision and the terms offered. Strong income, good credit, a healthy deposit, low debts and clear evidence all strengthen an application, while the property and your age also play a part.
Where to get help and next steps
Read our guides to mortgage affordability, your credit score, and improving your chances. Our guide to common mortgage myths is also worth a read. This is general information, not mortgage or financial advice.