Unfortunately there isn’t a simple answer to the question, ‘How easy is it to get a mortgage in the UK?’.
It really all depends on things like whether you already have an existing mortgage, your income, whether you’re in debt, what your credit is like, and how much of a deposit you have.
My article is going to take a look at how these factors affect your eligibility to get a mortgage in the United Kingdom, as well as just how much of a mortgage you can get in the UK and how to get a mortgage in principle.
If you’re wondering if you can get a mortgage if you don’t have a job, or how to get a mortgage in the UK if you’re a first-time buyer, I’ve got that covered too!
So stick the kettle on, and get ready to find out just how easy it is to get a mortgage in the UK.
Finding the Right Mortgage
Getting a mortgage all comes down to finding a lender who is willing to take the risk and stump up the cash for you to buy a house. While every lender can have different criteria, there are things that are going to affect your eligibility whoever you go to.
Such as:
1. Your Deposit
The simple fact is, lenders love it if you have a big deposit to put down because it means they have to lend you less money. The more you have to put down, the better mortgage deal you’re likely to get.
There are schemes available that require you to only put down a 5% deposit, such as the UK government’s Help To Buy Scheme, but the truth is, the bigger the deposit, the easier it is to get a mortgage in the UK.
Of course not everyone is able to save a huge amount of money for a deposit, and some people turn to family to help out…
If a family member gifts you the money for a deposit, it would have to be declared during your mortgage application – ideally with written confirmation from the family member (let’s face it – probably mum and/or dad) that you don’t have to pay it back.
If you were able to match that deposit, and double the amount you can put down, lenders are going to be even more likely to give you a mortgage.
2. Your Credit
Ah, the ‘C’ word…
There’s no denying that when it comes to how easy it is to get a mortgage in the UK, your credit rating plays quite a big part.
I’d always recommend checking your credit report BEFORE you start shopping around for a mortgage, and improve it as much as you can by paying off any debts and checking that all of the details on the report are correct.
There are things on your credit report that will have a bigger impact on your mortgage application than others.
For example, bankruptcy, IVA’s and huge debts are going to raise bigger red flags to a lender than that one mobile phone payment you missed back in 2015. Having said that, no lenders like any missed payments on your financial commitments and missing or being late with just one payment in the last 3-4yrs can be the difference between getting a mortgage and not!
So, what if your credit rating is bad, or if you have no credit history at all (which can be just as unappealing to lenders)?
Well, as I said, a good start is to pay off what you can NOW – even if it means delaying your mortgage search for a year or so while you sort out payment plans and get your credit back in shape.
Lenders will look at your debt-to-income ratio to make sure you can afford your mortgage payments, so clearing off any unsecured debts will make your application more likely to be successful.
It sounds a bit nuts, but if you don’t have a credit history, becoming an active borrower could be your best shot at getting a mortgage.
Getting a credit card (you can get ones that are specifically designed to build your credit), and making sure you pay off the full amount each month will show lenders that you are responsible with money, making you less of a risk to lend to.
3. Your Income
This one’s pretty self-explanatory – lenders want to see what your regular income is, and it doesn’t take a rocket scientist to figure out why.
They want to make sure you have the means to pay back the loan.
Seeing regular payments going into an account over a long period of time is important to mortgage lenders, so if you’re thinking of jacking your job of 10 years in for a new one, wait until you’ve had your mortgage approved – even if the new one is better paid. However, that said most lenders will lend to you from day one of getting a new job, as long as your contract is permanent. If you have a zero-hours contract then you will need to be employed by the same lender for a minimum of 12 months before a mortgage application. If your self employed all lenders will require a min of 2 years self-employed Tax Assessments as proof of income.
Speaking of better paid, you might instantly think that it would automatically be easier to get a mortgage in the UK the more you earn.
I can see why that might seem logical, but a huge salary is irrelevant if a mortgage lender can see from your bank statements that you are spending beyond your means.
How To Get A Mortgage In Principle
Right, so you’ve got the deposit, a regular income, and a credit report that’s in tip-top shape.
That should get you a mortgage in principle.
This is a statement or certificate from a lender that says ‘in principle’ they will lend you the remaining money you need to buy a house.
An AIP is NOT a solid mortgage offer – it’s the bit that comes before the full application process.
You don’t NEED one before you apply for a mortgage in the UK, but it can be helpful to get one before you start seriously house hunting.
This is because estate agents will want to ensure you can actually get a mortgage before you put an offer in on a house.
So, how do you get a mortgage in principle?
You need to approach a mortgage lender directly – or, better still, go to a mortgage broker. A mortgage broker will look at all of your details and work out which lender is most likely to offer you a mortgage in principle.
You won’t need to go through the full application process, but you will still need to provide things like:
- Your name and date of birth
- Your income and expenditure
- Three years of address history
Having an AIP makes you more attractive to sellers, making you stand out from other prospective buyers – yes, it’s likely you’re not the only one who thinks that this is your dream home!
Also, having an AIP gives you a good idea of how much you can borrow, so you’ll be able to search for properties in your price range.
Getting an agreement in principle is also good for your peace of mind if you’ve got a less than stellar credit history and you’re not sure what a lender might lend you.
Can I Get A Mortgage Without A Job?
How easy is it to get a mortgage in the UK without a job?
It’s obviously going to be easier to get a mortgage in the UK if you are in full-time employment – but ultimately lenders just want to know that you can afford to make your monthly repayments.
You’ll have to supply a lot more documentation to a lender if you are self-employed or freelance, for example, but what if you have no income of your own at all.
Impossible? Yes!
How To Get A Mortgage In The UK If You Are A First-Time Buyer
A first-time buyer is anyone who is buying their very first residential property – you are NOT a first-time buyer if you have owned a house or flat before, either in the UK or abroad.
Now we’ve cleared that up, how easy is it to get a mortgage in the UK if you are a first-time buyer?
Again, it’s all going to come down to your deposit, credit rating, income and expenditure.
Your best bet as a first-time buyer is to see a mortgage broker who will talk you through the process and point you in the direction of the best lender for you.
First-time buyers can take advantage of schemes such as the government’s Help To Buy Scheme and Shared Ownership – where you have a mortgage on a percentage of the property, and pay rent to a house association for the rest.
Not all lenders offer mortgages for these types of schemes, but a good mortgage broker (ie: us) will know the ones that do, and what your chances are of being accepted.
If this article has given you some food for thought, and you want to know more about how easy it is to get a mortgage in the UK, or you want to get started, More Than Money can help.
Give us a call on 01233 555 454 and we’ll be happy to walk you through it.
