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How to apply for a mortgage

Tom Martin
Written by Tom Martin, Content editor

Edited by Samantha Downes, Content Writer, 29 October 2021

Mortgage applications can be complicated, we explain how to go about getting a mortgage and the documentation you’ll need to get together before you start.
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Getting a mortgage

There are a few things you need to have ready before you apply for a mortgage, including a large enough deposit, which is usually around 15-30% of the property value, and proof of a regular income large enough to pay the monthly mortgage repayments.

Most importantly, however, you need to be certain that the mortgage you plan you apply for is right for you and that you can handle the commitment of paying your debts consistently for potentially 25 years, or even longer.

There might be more stringent checks and stress tests of your financial situation, but ultimately, even if you are approved, you are still responsible for making your monthly repayments. 

So it is important to compare mortgages online, do your research, budget accordingly and avoid rushing into signing anything until you are absolutely sure.

What do I need to do to get a mortgage?

  • Work out how much deposit you can afford.  If you are a first time buyer or needing to move home the UK Government’s mortgage guarantee scheme means that with a deposit of 5% you can buy a property worth up to £600,000. These 95% loan to value (LTV) mortgages are offered by many of the main mortgage lenders. There are also other government schemes including the Help to Buy scheme

  • Find out how much you could borrow. Use a mortgage calculator to find out whether you can afford a mortgage  based on your income and your spending commitments. You can also find out what a mortgage will cost you each month

  • Once you’ve found a mortgage lender you can ask them to draw up an  Agreement in Principle, it doesn’t mean you have a mortgage in place but it can help get the homebuying process going

  • Apply for a mortgage - make sure you have all the information and documents you need

How much money do you need for a mortgage?

In order to get a mortgage, you will need a certain amount of cash to put upfront as a deposit. 

On top of that, you will need enough income to assure the lender that you can cover the monthly mortgage repayments.

The general rule for the amount you might be allowed to borrow on a mortgage is based on your income multiplied by four or five. So if your income is £50,000 you might be allowed to borrow somewhere between £200,000 and £250,000.

But if your credit history is poor or limited you may struggle to borrow enough.

  • Read more about the size of the mortgage you can get

As for the deposit amount, this is usually around 15% to 30% of the property value. So if you are buying a property worth £300,000, you would likely need a deposit of around £45,000 to be able to get a mortgage.

With some housing schemes in the UK you may only need to put up around 5% or 10% of the property value in order to get a mortgage. But again, your credit score and income would still be a significant factor. We’ll explain more about this later.

You will also need to pass affordability tests which will take your outgoings as well as your income into account.

These tests include stress testing your finances against potential real-life scenarios such as a sudden Bank of England interest rate rise, or if you were to stop working for a few months.

They also check on your everyday spending and lifestyle choices, which means determining if your gym subscription or weekly food shop could be incompatible with your ability to pay off your mortgage every month.

What documents do you need for a mortgage?

To apply for a mortgage, you usually need as a minimum:

  • Three months of bank statements

  • Any other proof of income

  • Your passport or other identification

The lender will also carry out a soft credit check, which shouldn't show up on your file, but allow them to see if they might be willing to approve your application 'in principle'.

Getting a mortgage in principle is the first step to completing a mortgage application, and it is usually the easiest part.

However, it does give a good guide as to whether or not you can expect to complete the application. The lender will look at your income, your deposit, your credit history and your proof of income, and how much you are looking to borrow. From that, they will decide whether or not they can offer you a mortgage in principle.

What do I need to apply for a self-employed mortgage?

The story is different and potentially much harder if you are self-employed or work as a contractor.

Instead of providing three months worth of bank statements, it's more likely you will need around 18 months to a full two years of business income, including tax returns.

Banks and other mortgage lenders want to assess what your net income is, but more importantly, how reliable it is. Usually, if you are a full-time permanent employee, the lender trusts that your income is secure.

However, if you are self-employed, then your income is likely to fluctuate from month to month, according to your most successful periods of the year. As a result, the mortgage lender will want to get a better sense of your income by seeing how it fluctuates over a prolonged period of time.

Unfortunately, that means that your income could be determined on a more conservative basis. Even if you think your net income is high enough to get the mortgage you want, the lender might not see it that way because they don't want to take the extra risk.

You may also need a higher deposit amount than the usual 15% and possibly a stronger credit score than someone who has a full-time permanent job.

It's also important to remember to keep your personal credit products separate from your business. 

It might be considered okay in your line of work to miss a payment and carry it over into the next month, but if you do it on a personal credit card it will negatively impact your score.

Do I need a mortgage broker?

A mortgage broker could help compare mortgages and make the application process smoother as they will likely have an existing relationship with lenders.

You will probably want to compare mortgages yourself regardless of whether or not you use a broker.

But, they could be helpful especially if you are looking for a specialist mortgage, such as one for self-employed customers or for those with bad credit.

Compare first time buyer mortgages

Compare a huge range of first time buyer mortgages on our comparison tables