Mortgage Lending Criteria

There 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.

Lending criteria for a mortgage

Every mortgage provider has a policy on each of these aspects of your application:

Age

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.

Income

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.

Employment status

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.

Deposit

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).

Deposit source

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).

Debts

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%.

Credit history

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.

How criteria can vary between lenders

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

• Age: Over 18. No upper age limit.
• Income: No minimum
• Deposit: Minimum 5%, 10-15% for new build
• Credit: Must be free from unsatisfied CCJs, with no more than one satisfied CCJ or three satisfied defaults in the last three years#

Halifax

• Age: Over 18, under 80 at the end of the mortgage term
• Income: No minimum
• Deposit: Minimum 5%, 15% for new build flats
• Credit: Scoring will review defaults, CCJs, IVAs, etc. but these can potentially be ignored based on context

HSBC

• Age: Over 18. No upper age limit.
• Income: No minimum
• Deposit: Minimum 5%, 15-20% for new build
• Credit: Must be free from CCJs over £500, IVAs, or bankruptcy in the last three years

Nationwide

• Age: Over 18, under 72 at the point of application, under 75 at the end of the mortgage term
• Income: No minimum
• Deposit: Minimum 5%, 15-25% for new builds or flats
• Credit: No more than three months’ mortgage arrears in the last three years

NatWest

• Age: Over 18, under 72 at the point of application, under 75 at the end of the mortgage term
• Income: No minimum
• Deposit: Minimum 5%, 15-25% for new build
• Credit: Must be free from IVAs and bankruptcy in the last six years

Santander

• Age: Over 18, under 75 at the end of the mortgage term
• Income: No minimum
• Deposit: Minimum 5%, 15-20% for new build
• Credit: Must be free from arrears in the last 12 months and entirely free from IVAs, bankruptcy, or property repossession

What happens if you don’t meet the criteria?

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.

Buy-to-let lending criteria

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.

Mortgage affordability

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.

Get matched with the right broker

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.