Mortgage Eligibility: Everything You Need to Know - NerdWallet UK (2024)

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  • Am I eligible for a mortgage?
  • What documents do I need to show to prove mortgage eligibility?
  • Mortgage affordability checks
  • How long does it take for a mortgage application to be approved?
  • How to compare mortgage deals

Applying for a mortgage is a big financial commitment and you’ll need to tick a few boxes to be eligible for one. Lenders have different mortgage eligibility criteria, which you must get your head around before applying.

Whether you’re a first-time buyer or looking to buy your next home, we explain everything you need to know about mortgage eligibility and what documents you’ll have to show lenders to improve your chances of getting a loan.

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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.

Am I eligible for a mortgage?

Each mortgage lender has its own set of rules for assessing mortgage applications. These rules are often called ‘mortgage eligibility criteria’.

Although the requirements for lenders can vary, most will look at the following things when you apply for a mortgage:

  • Age: Most lenders have a minimum age requirement for a mortgage and a maximum age that they will lend to.
  • Income: Any wages, pensions, investments, bonuses, commission, benefits or maintenance payments that you receive.
  • Spending: Essential expenses, such as food, travel and childcare, and non-essential spending, such as holidays and leisure activities.
  • Debt: Financial commitments, such as credit card, car finance, overdraft, loan, or buy now, pay later repayments.
  • Deposit: How much you have saved to put down as a lump sum.
  • Employment status: Whether you are employed full-time, part-time, self-employed, unemployed, or retired.
  • Credit history: This includes your credit score and whether you have any county court judgments (CCJs), individual voluntary arrangements (IVAs) or have declared bankruptcy.

It’s worth noting that some lenders adapt their mortgages for teachers, offering flexibility over some of the criteria to try to make it easier for education professionals to get a mortgage. In a similar vein, you won’t find specific ‘NHS mortgages’, but there are certain lenders that offer mortgages with features that may help NHS workers who perhaps start off on low pay, or have complicated pay structures. If you’re not in permanent employment, and perhaps have a fixed-term or zero-hour contract, a fixed-term contract mortgage might still be an option.

Before applying for a mortgage you should get a mortgage in principle from a lender. This will give you an indication as to whether you may qualify for a mortgage and how much you may be able to borrow.

» MORE:What is a mortgage in principle?

What documents do I need to show to prove mortgage eligibility?

When you apply for a mortgage, a lender will ask for documents to prove and support the information that you give in your application and that you meet their eligibility criteria. The types of documents you’ll need to supply may differ depending on the mortgage provider, and your circumstances, but most will request a minimum of the following:

  • Proof of ID: You’ll need to provide legal documents, for example, a current passport or a full UK driving licence photocard, so that a lender can verify your identity.
  • Proof of income: Lenders will ask for bank statements and payslips to show evidence of any income from employment, benefits or other payments.
  • Tax forms: If you’re self-employed you’ll need to provide tax forms and your self-assessment tax returns (SA302) from the last two or three years along with business bank statements to prove your earnings.
  • Proof of deposit: You’ll need to show evidence of your deposit with bank statements or savings account statements. Lenders may ask you to complete a form if you use a gifted deposit.
  • Household bills: Mortgage providers ask for recent bills, such as energy, water or council tax, to prove your address.

Mortgage affordability checks

In 2014, the Financial Conduct Authority (FCA) introduced new rules to protect borrowers against poor mortgage lending practices. The new rules mean lenders have to carry out more extensive mortgage affordability checks before approving a loan.

These checks were designed to ensure that borrowers can comfortably afford mortgage repayments now, and in the future. Lenders will look at your income, outgoing and existing debt repayments to build a picture of how much you can afford to commit to mortgage repayments each month. Lenders conduct a hard credit check to see your track record for paying off debt as well.

Many mortgage providers also conduct a ‘stress test’ to check whether you’ll be able to keep up with repayments in the future should circumstances change – for example, if interest rates increased or if you decided to start a family.

How long does it take for a mortgage application to be approved?

It can take between two to six weeks for a mortgage application to be approved. However, this can vary depending on the lender and complexity of your personal circumstances. Ensuring that you supply the correct documents on time for your application can help avoid any hold-ups with eligibility and affordability checks.

How to compare mortgage deals

It’s always worth using a mortgage repayment calculator to get a rough idea of how much you will be able to borrow before you start to look for the best mortgage lenders and deals. Once you have an estimated loan amount, you can start shopping around for the best offers for you.

If you are buying your first home or would like some support during the mortgage process, hiring a mortgage adviser or mortgage broker can help. They tend to have access to deals from a wider range of lenders, which can help them find the most suitable mortgage for your circumstances.

» MORE:Check the latest mortgage rates

About the Author

Brean Horne

Brean was a writer and spokesperson for NerdWallet who covered a variety of topics including money-saving tips, credit scores and managing debt. With over five years' experience in finance, she…

Read more about Brean Horne and explore their articles

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Mortgage Eligibility: Everything You Need to Know - NerdWallet UK (2024)

FAQs

Who is eligible for a mortgage in the UK? ›

You can only apply for a mortgage if you are over 18. All lenders have different rules about how old you can be to get a mortgage. Your current and retirement income will be considered if you want to retire during your mortgage agreement.

How much mortgage can I get on a 30k salary in the UK? ›

On a salary of £30,000 per year, most mortgage lenders in the UK may offer you a loan amounting to 4 to 4.5 times your annual income. This means you could potentially borrow between £120,000 and £135,000.

What income is needed for a 600k mortgage? ›

The principal, interest and property mortgage insurance on $600,000 house with a 15% down payment and a 30-year, fixed-rate mortgage with 7% rate would cost $3,662. To afford this, you would need a monthly income of about $13,079 or an annual income of about $157,000.

How much income do I need for a 200K mortgage? ›

So, by tripling the $15,600 annual total, you'll find that you'd need to earn at least $46,800 a year to afford the monthly payments on a $200,000 home. This estimate however, does not include the 20 percent down payment you would need: On a $200K home, that's $40,000 that needs to be paid in full, upfront.

Can a US citizen get a UK mortgage? ›

Can an American get a mortgage in the UK? American nationals can secure mortgages on UK real estate. The banks which will lend depend on whether you will remain resident in the US, or whether you are resident in the UK, and which type of visa you have.

Can a non British citizen get a mortgage in the UK? ›

Non-residents in the UK or British Expats can successfully secure a mortgage in the UK and get their foot on the property ladder. However, those trying to apply have found it much more difficult in recent years.

What salary do I need to afford a 500k house in the UK? ›

Income Requirements:

For a £500,000 property, you'd need an annual income between £111,000 and £125,500, considering lenders typically offer up to 4-4.5 times your salary.

How much do I need to earn to get a mortgage of $400,000 in the UK? ›

How Much Do I Need to Earn to Get a Mortgage of £400,000 UK? Lenders typically offer mortgages ranging from 4 to 5 times your yearly income. Therefore, for a £400k mortgage, an annual salary of £80,000 to £100,000 is generally required.

Is 70k a good salary in the UK? ›

Earning a 70k salary in the UK is generally considered a good income that provides the means to cover living costs, including housing, utilities, transportation, and leisure activities.

What is the 28/36 rule? ›

According to the 28/36 rule, you should spend no more than 28% of your gross monthly income on housing and no more than 36% on all debts. Housing costs can include: Your monthly mortgage payment. Homeowners Insurance. Private mortgage insurance.

Can I afford a 250k house on 50K salary? ›

You can generally afford a home for between $180,000 and $250,000 (perhaps nearly $300,000) on a $50K salary. But your specific home buying budget will depend on your credit score, debt-to-income ratio, and down payment size.

Can I afford a 600K house on 100K salary? ›

A $100K annual salary breaks down to about $8,333 per month. Applying the 28/36 rule, 28 percent of $8,333 equals $2,333. That's notably less than our estimated monthly home payment on a $600,000 house, $3,700, so no, you probably cannot reasonably afford a home purchase of that amount on your salary.

Can I afford a million dollar home with 200K salary? ›

She has contributed articles to a variety of leading national publicationsm including Travel + Leisure, TravelAge West, AAA Northeast, Bankrate, U.S. News and World Report, L.A. Parents Magazine, and TravelPulse. A homebuyer would need to earn nearly $200,000 annually to afford a $1 million mortgage.

What credit score is needed to buy a 200 000 house? ›

You typically need at least a 620 credit score to qualify for a conventional loan. Though, the higher your score, the better your chances of getting approved for the best rates.

Is 200K a good salary in the US? ›

It's not a great income (like the top 10% or higher), but it's also better than the median income. It is a good income. If you accept my definition, then a good household income would be $130,000 per year (in 2022) and a good individual income would be $82,000 per year (in 2022).

How long do you have to live in the UK before you can get a mortgage? ›

How Long Do You Need to Live in the UK to Get a Mortgage? The general rule is that you need to live in the UK for three years if you want to get a UK mortgage. This gives you a three-year address history, which is the standard amount that is required to give you a reliable and traceable credit history.

What is the minimum salary to get a mortgage UK? ›

There is not a set wage you need to earn to get a mortgage. Instead, it will depend on the lender. Most lenders will look at what you can afford on a case by case basis. But some may have set conditions that can stop you from getting approved.

Can a non resident buy a house in UK? ›

Although there are no legal restrictions on foreigners buying property in the UK, it's essential to have the necessary documentation in place to ensure a smooth and efficient purchase process.

Is it easy to get a mortgage in the UK? ›

It all depends on your financial situation. Mortgage lenders will look at your income, your deposit, existing debts, savings and even your spending habits.

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