The mortgage application process explained - and how to improve your chances of getting one

Written by Derin Clark, reporter at

One of the toughest challenges of getting onto the housing ladder is saving for a deposit, but once this has been achieved many overlook the next challenge – getting accepted for a mortgage.

While many still believe that you will automatically get a mortgage if it is three times your yearly income, this is in fact a myth. Today, mortgage lenders are much more individualistic in their approach in deciding who they will lend to and a key part of making this decision is whether or not they believe the borrower can afford the mortgage.

Why a lender will assess your finances

When applying for a mortgage, you should expect the lender to thoroughly assess your finances.

While each individual lender will have their own criteria when assessing if you can afford the mortgage – which is why one may reject you and another accept your mortgage application – they will all be evaluating your finances to determine whether or not you can afford the mortgage repayments. As well as this, while mortgage rates are low today it doesn’t mean to say that low in the future and, as such, the lender will be assessing whether you can continue the repayments if rates increase.

How a mortgage lender will assess your finances

A mortgage lender will normally look at a minimum of three months’ worth of your bank statements to analyse the income you have coming in each month compared to your outgoings.

While a lender will want to ensure that you can keep up with mortgage repayments, they will also want to make sure that you can also repay other debts, your monthly bills, afford your weekly food shop and still have money left over for entertainment. In short, the mortgage lender will want to ensure that you can afford the mortgage but still live comfortably.

Will your lifestyle impact your mortgage application?

The only way your lifestyle choices should impact your mortgage application is if it comes across as financially risky. For example, if you gamble regularly and have a large amount of debt, this could result in your mortgage application being rejected.

If, however, you gamble occasionally but have little debt and a large amount of disposable income, this will be unlikely to affect your application.

While gambling can be seen as risky, any lifestyle behaviour that involves spending money when you have large debts, such as regularly clothes shopping or going on holidays, could negatively impact your application.

Managing your money

Along with assessing whether you can afford a mortgage, lenders will also likely look at how you manage your money.

Often, lenders will consider taking out a payday loan, or similar type of loan, over the last 12 months as a red flag and this could result in your mortgage application being rejected. As well as this, having a large amount of existing debt can negatively impact your application.

Another reason why a lender might reject your mortgage application is if you have defaulted on debts within the last five years.

Sometimes, lenders will also review how you manage your day-to-day finances. For example, if you regularly transfer money between yours and your partner’s account, this could look suspicious to mortgage lenders.

Improving your chances of being accepted for a mortgage

When applying for a mortgage, there are some things you can do to improve your chances of being accepted.

Reducing your debts, or ideally paying off the majority of your debts, before making a mortgage application will improve your chances of success. As would having a savings pot, even if it is just a small amount.

In addition to this, in the six months leading up to your mortgage application being careful with your finances, for example not splashing out on expensive holidays or unnecessary big-ticket items, and not doing any irregular activity with your money will help your mortgage application.

If you are looking for a mortgage, the mortgage charts will allow you to see a full list of current mortgage rates on offer.