How to get Accepted for a Mortgage
Worried about getting a mortgage approval or pre-approval? Find out how to get accepted for a mortgage in our simple step-by-step guide!
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Author: Pete Mugleston - Mortgage Expert, MD
Updated: January 14, 2022
Whether you’re a first-time buyer or a veteran borrower, getting a mortgage approval can be massively stressful. Lenders all have their own criteria for assessing mortgage applications and could reject you based on anything from job status to the size of your deposit.
Fortunately, there are plenty of ways to improve your chances of having your mortgage application accepted, including having the right paperwork ready, understanding the approval process and finding the right lender.
Read on for more information or jump to the section that’s relevant to you via the links below…
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What’s the process for a mortgage approval?
There’s three key steps involved with getting a mortgage:
Step 1. Mortgage pre-approval
Getting pre-approval for a mortgage before you begin house hunting, while not essential, can prove to be a shrewd move as it provides a guide of how much a lender could let you borrow.
An agreement in principle (AIP) is basically an estimate from the lender of how much it’s likely to lend to you based on the information you’ve submitted so far. Having this in hand shows a seller you’re a serious buyer and could give you the edge if there’s a lot of competition for the property you want.
It’s still not a guarantee you’ll have your mortgage approved. That only comes after you’ve completed a full application and received your official mortgage offer.
Step 2. Formal Mortgage Offer
The lender will typically ask for more information about your earnings and conduct further checks of your credit record at this stage. It will also get the property valued to confirm it’s worth what you’re planning to pay for it. If you’re applying for a remortgage, your lender may still want to carry out a valuation – but not always. Remember, a valuation is not the same as a survey and you may wish to commission your own surveyor to assess the condition of the property.
If the lender is happy with the valuation, it will make you a formal mortgage offer generally within four weeks of applying.
Step 3. Exchange of contracts
Once your mortgage offer has been received, you can then proceed to the final step with your solicitor and exchange contracts with the seller. After the contracts are signed everything is legally binding.
The money from your mortgage provider can be released, along with your deposit funds and the keys to your new property can be handed over to you.
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What you should do before starting your application
To help get your mortgage approved, there’s a few simple steps you can take right at the outset that can save a lot of time and effort further down the line.
Step 1. Check your credit reports
One of the first things a lender will do is look at your track record of paying back loans. They do this by searching your credit reports for any red flags.
A credit report has details of all your past loans including credit cards, mobile phone agreements, overdrafts and mortgages. It records how much credit you were given and how good you were at making the repayments.
It’s worth checking there are no errors on your report before you apply for a mortgage. You have the right to challenge any mistakes – or at the very least add a note to your report explaining any late or missed payments.
You can download your credit reports through our dedicated credit reports hub.
Step 2. Get your paperwork in order
Before you’re accepted for a mortgage, you’ll need to provide the lender with the right paperwork. If you miss anything out, the lender won’t be able to approve your loan. That’s why it’s worth getting all of your documents in order before making your application.
Lenders generally require…
- Proof of ID (passport or drivers licence)
- Proof of address (a utility or credit card bill)
- Proof of income (typically your last three months’ payslips or 2-3 years certified accounts for self-employed)
- Latest three months’ of bank statements
- Your latest P60 form (showing how much you earn and the tax you pay each year)
- Evidence of your deposit source (for example, a savings statement or letter from anyone gifting you the money)
- Evidence of any bonuses or commission
- Current mortgage statement (if you already have one)
Step 3. Work out how much deposit you need and where it’s coming from
Try to establish the size of your mortgage deposit before you make your application. You’ll typically need at least 5% of the price of the property you’re after, but put more down if you can as, generally, the bigger your deposit, the more chance you have of being accepted by a lender.
Don’t worry if you only have a small deposit; you can still get approved. The best course of action is talking to a specialist advisor who can search the market and look for a lender who can offer the best terms for smaller deposits.
How do you find the right lender?
There are lots of lenders out there but not all will be the perfect fit for you. If you have a regular income, a decent-sized deposit and a clean credit history, you probably won’t have any issue getting your mortgage approved.
But if your situation is even slightly unusual – and that could be as simple as being self employed – your chances of rejection will increase.
That’s where a specialist broker can help. They can offer tailored advice for your circumstances, comb the whole market and find the best lender and rate for you.
They can also guide you through the application process to improve your chances of getting approved.
Our free, broker-matching service will quickly assess your needs and circumstances to pair you with a mortgage advisor who’s ideally placed to help you – Make an enquiry to get started.
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What eligibility criteria do you need to meet?
Lenders each have their own eligibility criteria but, typically, they all look at whether you can afford the loan, the size of your deposit, and your credit history.
However, if your circumstances are even slightly atypical, the lender will look at your application differently and will probably ask for more information.
We’ve rounded up some of the circumstances that lenders may probe more closely…
You’re a first-time buyer
If you happen to be applying for a first-time buyer mortgage, you’ll probably have to undergo stricter-than-usual affordability checks. Lenders view you as far riskier than second-steppers or home movers so they’ll want to dig deep to make sure you can afford your repayments.
To avoid paying super high interest rates, you may need to stump up a bigger deposit. Some lenders offer 90% or 95% mortgages, which require a 10% or 5% deposit. You can even get a 100% mortgage meaning you don’t need a deposit at all – but these are extremely rare.
An experienced broker will be able to guide you through the application process and find the best deal from the whole market.
Getting a mortgage if you’re self-employed can be tricky but it’s not impossible. Lenders tend to see you as higher risk because you may not bring in a regular, stable income.
When it comes to a self-employed mortgage application, the big difference is the way lenders assess your income. If you have less than two years’ accounts, some lenders will still consider lending to you.
You’ve had bad credit in the past
Lenders will always prefer your credit record to be immaculate, but don’t fret if it isn’t. You can still get a mortgage with bad credit.
While a missed credit card or loan repayment or too many credit applications may be red flags for some lenders, there are specialist providers who will lend to bad credit applicants. However, as you’re deemed higher risk, you’ll probably end up paying a higher rate of interest and you may also be asked for a larger deposit of between 20% and 25% rather than 5% or 10%.
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Do you need a minimum credit score to have a mortgage approved?
Your credit score is a numerical value assigned to you by a credit reference agency, based on your financial history and conduct such as how good you’ve been at making loan repayments in the past.
Typically, the higher your score, the less risky you’re are likely to be to a lender.
While it’s true a good credit score can open up a bigger range of deals and more competitive rates, there’s no minimum score to get approved for a mortgage. The way lenders view credit scores varies massively. Some won’t look at your score at all. Instead, they’ll consider your credit report and look for any red flags.
Lenders usually check your report or score from at least one of the three main credit agencies – Equifax, Experian, or Transunion – but their final decision will be based on their internal lending criteria.
Get matched with an experienced mortgage broker
Getting a mortgage approved can be straightforward. But it can also be a gruelling, stressful and emotional process, particularly if your circumstances are unique. That’s why it’s worth speaking with a specialist broker who deals with non-conventional applications every day.
Make an enquiry or give us a call on 0808 189 0463 and we’ll match you with a broker who can help with your individual needs today. We hand-pick all the brokers we work with and rigorously vet them on your behalf so you can be assured you’re getting the best advice possible.
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Mortgage Expert, MD
About the author
Pete, 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 found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with 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 OMA of course!