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Mortgage Lending Criteria
Author: Pete Mugleston
CeMAP Mortgage Advisor, MD
Updated: July 29, 2024There are no universal eligibility criteria to get a mortgage. Every lender is free to set their own policy, and there are differences between all of them. With over 70 banks, building societies, and specialist providers of mortgages in the UK, almost every hopeful buyer will be included in at least one.
Below, we’ve outlined the areas that lending criteria usually cover. This will help you determine if you’ll qualify with a lot of different lenders, or just a few. The next step is to speak to a broker, to find the lender that’s the best match for you.
Every mortgage provider has a policy on each of these aspects of your application:
You’ll need to be over the age of 18 to get a mortgage from any UK lender (some may stipulate a minimum age of 20 or 21). Most lenders also have an upper age limit at the end of the mortgage term. If the lender’s age limit is 75 at the end of the mortgage term, this means that a 50-year-old can get a 25-year mortgage, but a 60-year-old can only get a 15-year mortgage.
Some, but not all, lenders have a minimum income requirement. It can be between £10,000 and £25,000. Whether or not the lender has a set policy for minimum income criteria, you’ll still need to pass the affordability assessment for the size of the mortgage you’re applying for. Many lenders will not accept foreign currency income.
Your employment status won’t usually exclude you from getting a mortgage, but it may limit your options. For example, not all lenders accept applicants on zero-hours contracts. Some lenders won’t accept applicants who have been in their current employment for less than 12 months.
Many lenders require a minimum deposit of 5%, but some require 10% or even 15%. They will often have a different minimum depending on whether you’re buying a flat or a house (it will be higher for a flat) and whether it’s a new build or an older property (it will be higher for a new build).
As well as the size of your deposit, the source of the deposit is also important. If you’ve saved the deposit using income from employment, this won’t be an issue. Gifted deposits from family members are usually accepted, but loaned deposits aren’t usually accepted (though there are some exceptions albeit the repayment arrangements would need to be factored into the overall affordability assessment).
You’ll be asked to provide evidence of your monthly outgoings and report any debts you’re currently paying off. Your lender will calculate your debt-to-income ratio, which is the proportion of your monthly income that’s spent paying off debts and bills such as utilities. They could have a maximum debt-to-income ratio of between 25% and 50%.
As well as looking at your current debts, all lenders will check your credit history when you apply for a mortgage. Each one sets its own rules for rejection or approval. Some allow bad credit incidents they consider minor, such as late payments, but there are very few that will consider more significant incidents, such as repossession or bankruptcy.
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Below, we’ve summarised the key lending criteria for several of the major mortgage lenders. Bear in mind that there are many more providers with different criteria, so if there’s something specific you’re looking for, it’s best to speak to a broker.
Barclays
Halifax
HSBC
Nationwide
NatWest
Santander
Just because you don’t fit the ideal profile of a mortgage applicant doesn’t mean you can’t get a mortgage. There is enough variance in the criteria of different lenders that you can likely find a handful of lenders to consider you, whatever your circumstances. The brokers we work with often deal with enquiries about the following issues.
From the age of 50 onwards, it becomes harder and harder to get a mortgage. However, some lenders will consider applications from older borrowers (even up to age 75), as long as you have evidence of sufficient income to make the repayments. Otherwise, you can consider a retirement interest-only mortgage or a lifetime mortgage.
There are plenty of lenders who’ll consider self-employed applicants, but it can be harder to borrow the amount you need. A broker can advise you on which lenders will be most generous in their assessment of your income.
Credit is one of the areas where lenders’ policies can vary the most. Some have very strict rules while others are far more accommodating. It’s best to speak to a broker who specialises in bad credit applications about the specific issues you’ve experienced and how that might affect your chances of getting a mortgage.
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Lending criteria for buy-to-let mortgages are very different to the criteria outlined above. Lenders will be far less concerned about your income and debts and will instead look at the expected rental income of the property and your experience as a landlord.
Meeting the eligibility criteria to borrow is one thing, but the affordability assessment a lender will use to see how much you can borrow is an entirely different issue. Lenders decide this using income multiples. For example, if they use an income multiple of 4.5 (which is usually the most common) and you earn £40,000, you could probably borrow £180,000.
But, it’s important to emphasise that you could potentially afford a mortgage – using the simple calculations used by lenders – without being eligible for one. So, using the example mentioned here, you could afford to borrow £180,000 with a lender but if you fall outside their eligibility criteria (say, your debt-to-income ratio was too high or you’ve had a severe credit issue recently) then your application might be rejected.
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Since every lender has their own eligibility criteria, the only ways to know for sure whether you’ll be accepted are to either apply directly (and risk a declined application) or speak to a broker, who can advise you on where to apply.
Many brokers specialise in certain types of applicants, such as self-employed applicants or bad-credit applicants. If you’d like to speak to a broker with specific expertise, you can find one through our broker-matching service. Just give us a call on 0808 189 2301 or enquire online.
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About the author
Pete, a CeMAP-qualified mortgage advisor and an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete successfully went the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained and his love of helping people reach their goals led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!
CeMAP Mortgage Advisor, MD
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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
All of our content is written or verified by qualified advisors from the front line. Our guiding purpose is to ensure borrowers can make the best possible decisions by offering helpful and objective information and guidance on all things mortgages. Please send us a quick email at [email protected] if you spot anything you think needs checking or could be better.
The guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK. The overall cost for comparison is 4.8% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration.
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*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us as well as any of our own are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.
Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.
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