Getting a mortgage used to be fairly straightforward. You’d show the lender your payslips, prove you could cover the repayments, and you were generally good to go.
It’s a different picture now.
Lenders scrutinise spending habits more closely than they used to. Affordability checks have tightened. And the rate you’re offered will often depend on the strength of your application, not just the deal you’ve seen online.
This applies whether you’re buying your first home, moving up the property ladder, remortgaging or investing in a buy-to-let property.
A poorly prepared application can mean a worse rate and terms, a smaller loan or a straight decline, even when your income looks perfectly healthy on paper.
The good news is that most of what affects your mortgage application is within your control. This blog explores what you can do to put yourself in the strongest possible position.
Why approval isn’t guaranteed, even with a good income
Earning a decent salary doesn’t automatically mean you’ll get the mortgage you want. Lenders run affordability calculations that go well beyond your income. They’ll look at your outgoings, existing debts, spending patterns and, increasingly, how you’d cope if interest rates rose further.
Many also stress-test your finances against a higher rate than you’d be paying, to check you could absorb any future increases.
If you’re self-employed or earn variable income from month to month, you’ll often face extra scrutiny, with many lenders typically wanting to see two or three years of accounts before they’ll lend to you.
None of this makes getting a mortgage impossible. It just means getting prepared matters more than it used to.
Get your finances in shape before you apply
Lenders will look at your bank statements going back three to six months, so start cleaning up your finances well before you apply.
Pay down any credit card balances where you can, particularly if you regularly get close to your limit. A maxed-out credit card, even one you pay off in full each month, can count against you because lenders look at your available credit, not just your balance.
Car finance, store cards and ‘buy now, pay later’ services like Klarna all count as credit commitments, too. Lenders will add these to your outgoings, which can reduce what they think you can afford to borrow. So, if you’re planning to apply for a mortgage in the next year, it’s worth thinking carefully about taking on any new credit in the meantime.
Be ready to explain unusual transactions. A few large transfers between accounts, regular payments to betting apps, or money sent abroad to family can all prompt questions from an underwriter. You don’t need a spotless bank statement, but you do need a sensible explanation if asked.
Building a consistent pattern of saving, even modest amounts, can also help. It shows lenders you can manage your money responsibly and have some financial resilience if costs rise unexpectedly.
Check your credit file for errors
Before you apply, check your credit file with all three main credit reference agencies (Experian, Equifax and TransUnion). Lenders may use any of them, and the information they hold on you can differ between agencies.
Errors on your credit record are more common than you’d think. An old debt that’s already been settled but still shows as outstanding, a previous address linked to someone else’s credit history or a missed payment that was actually paid on time can all drag down your score, so they’re worth disputing if you spot them.
If you’ve got a ‘thin’ credit file, perhaps because you’ve always paid for everything in cash, you’ve recently moved to the UK, or you’re young and haven’t borrowed much before, that’s a different problem from a poor credit history, but it can still cause issues.
Lenders struggle to assess risk when they’ve got little to go on. A credit card used for small purchases and paid off in full each month, over several months, can help you build a track record before you apply.
Save the biggest deposit you can
The size of your deposit doesn’t just affect how much you’ll need to borrow. It determines which loan-to-value (LTV) band you fall into, and that has a direct impact on the rate you’re offered.
Moving from a 90% LTV mortgage to an 85% one, or from 85% to 75%, can unlock better rates. Lenders view smaller loans relative to the property’s value as lower risk, and they price accordingly. Even finding an extra 5% deposit can sometimes save you more over the life of the mortgage.
If you’re saving towards a first home, a Lifetime ISA is worth a look, as the Government adds a 25% bonus on top of what you save, up to a maximum of £1,000 a year. Gifted deposits from family are common, too, though lenders will usually want a letter confirming the money is a genuine gift rather than a loan that needs repaying.
Get a mortgage in principle early, and understand its limits
A mortgage in principle (sometimes called an agreement in principle) gives you an estimate of how much a lender might offer, based on a quick assessment of your income and credit history. Estate agents typically expect to see one before they’ll take an offer seriously, and sellers feel more confident dealing with a buyer who has one in place.
It’s useful, but it’s not the same as full approval. A mortgage in principle is based on limited information and hasn’t been through the full underwriting process. Your application could still be declined, or offered on different terms, once a lender examines your finances properly. Treat it as a starting point for your house hunt, not a guarantee of the funds.
Avoid major financial changes mid-application
Once you’ve submitted your mortgage application, resist the urge to make any significant financial moves until it completes.
Changing jobs, even for a better salary, can unsettle a lender if you haven’t passed your probation period in the new role. Taking out new credit, whether that’s car finance, a new phone contract or a store card, can affect your affordability calculation at the worst possible moment. Large, unexplained transfers between accounts can trigger fresh questions from your underwriter, sometimes weeks into the process.
Closing old bank accounts can be just as risky. It might seem tidy, but it can affect your credit history and raise questions you weren’t expecting.
If in doubt, hold off and speak to your mortgage adviser first. A delay caused by underwriting can cost you a property, particularly in a competitive market.
Look beyond the headline rate
The mortgage with the lowest advertised rate isn’t always the cheapest overall, and it’s rarely the right fit for everyone.
Arrangement fees vary considerably between products, and a slightly higher rate with a lower fee can sometimes work out cheaper, depending on how much you’re borrowing and for how long. Early repayment charges matter, too, particularly if there’s a chance you might move, remortgage or pay off some of the loan early.
Then there’s the choice between fixed and tracker rates, which depends on your appetite for risk and your view on where interest rates are heading. A mortgage broker with access to the whole market can compare deals that you’d never see by going directly to a high street lender. They can also help you weigh up the true cost of each option rather than just looking for the best headline rate.
Other considerations
If you’re self-employed, get your accounts in order well before applying. Most lenders want two to three years’ worth, and some will average your income across that period rather than basing it on your best year.
If you’re remortgaging, timing matters. Start looking three to six months before your current deal ends, so you’re not rushed into accepting whatever’s available when your fixed rate expires. Depending on your circumstances, a product transfer with your existing lender might be quicker than a full remortgage, but it’s not always the cheapest option.
Older borrowers may find that some lenders cap the age at which a mortgage must be repaid, so later-life mortgages are worth exploring if you’re closer to retirement.
And if you’re buying a buy-to-let property, affordability is usually assessed differently, based largely on the rental income the property can generate rather than your personal income and financial circumstances.
How can BDWM help?
Securing the right mortgage isn’t just about finding a good rate. It’s about presenting your finances in the strongest possible light and matching your circumstances to the lenders most likely to say yes, on terms that suit you.
At BDWM, we have a team of independent, experienced mortgage advisers based in Leicester with access to the whole market, not just a handful of high street lenders. We’ll look at your full financial picture, flag anything that might cause problems, and help you prepare a strong application from the outset.
We support clients through every stage of the process, from your first mortgage in principle through to completion, and we’ll be on hand if anything changes along the way. Whether you’re buying your first home, moving, remortgaging or investing in a rental property, we’ll help you find a deal that works for your situation.
Contact us today for a no-obligation consultation to discuss your mortgage options and how we can help you secure the right deal.