How to get a mortgage in the UK

If you’ve been living in the UK for a while, the chances are that buying a house here has crossed your mind. Whether it’s a farfetched dream or a reality that’s in close reach, it’s difficult not to think about homeownership when living here. After all, the UK is pretty much obsessed with it.

Unlike other European countries—like Germany, a nation of renters, for example—the UK values homeownership highly. The desire to own a home is officially deeply rooted in the British psyche.

But of course, very few people can afford to buy a house outright. And that’s where the mortgage market comes in.

Curious to find out more? Here’s how to get a mortgage in the UK. 

What is a mortgage?

Firstly, let’s start with the basics. A mortgage is a loan taken out for the purpose of buying property or land. It is ‘secured’ against the value of the property until it’s paid off. Generally, mortgage terms run for 25 years but can sometimes be shorter or longer. 

Since average house prices don’t correlate with average earnings in the UK, many people take out mortgages to help them buy their home. In fact, it’s estimated that there are almost 11 million mortgages in the UK. 

How can I get a mortgage?

One of the main criteria for being eligible for a mortgage is taxable earnings. You must be a UK taxpayer to be successfully approved for a mortgage. You must also have enough money to put down a deposit. Depending on the mortgage, this can be as little as 5% of the property’s value.

Mortgage lenders also like it if you’ve built up a bit of a credit report. This is so they can assess whether you have a good repayment history. A credit report looks at any accounts you’ve opened for the past six years including loans, overdrafts, credit cards, mortgages and certain utilities. If you’ve not taken out credit before, it’ll be more difficult for them to assess your creditworthiness.

The best way to increase your chances of getting a mortgage is by contacting a trusted mortgage advisor as soon as you start thinking about buying a house. They will be able to assess your eligibility and advise on how to improve your chances of being accepted for a mortgage. Mortgage advisors are paid commission from the lender, but may also charge a small fee. However, when you consider the hassle and bureaucracy that goes into buying a house, this fee is more than worth it.

How can I improve my chances of getting a mortgage?

One of the first ways to improve your mortgage eligibility is by saving enough money for a deposit. The higher the deposit you have, the less money you’ll need to borrow. And the less money you borrow, the smaller your monthly repayments and overall interest to pay.

You’ll also need to make sure you’re earning enough money to pay UK tax. The more money you earn, the more you’ll be able to borrow. You’ll need to build up a credit file, too. Credit reference agencies like Experian, Equifax and TransUnion offer free online credit reports so you can check your eligibility yourself.

If you’ve not built up much of a credit file, there are many ways to do so. This could be as simple as paying your bills on time. Contact an independent mortgage broker as soon as you start thinking about a mortgage. The mortgage industry is highly regulated and brokers are obliged to give you impartial advice that’s in your best interests.

What do you need to get a mortgage?

There are many ways to improve your chances of being accepted for a mortgage. These include:

• Setting out your budget—sit down and work out how much you can afford for a deposit. You should also look at your earnings and work out how much you can afford to pay monthly towards mortgage repayments.
• Contact a mortgage advisor—a regulated mortgage advisor will act in your best interests. They’ll offer you honest and impartial advice on how to improve your mortgage eligibility.
• Building up your credit file—this could be as simple as closing down credit cards that you no longer use. Or checking that you’re on the electoral roll. 
• Proving your income—your mortgage advisor will want to see proof of your income. Generally, this includes a P60 form your employer and three months’ worth of payslips. If you’re self-employed, you’ll need to provide your full accounts for a minimum of one year. However, most lenders require two to three years’ proof of taxable income. 
• Saving up—the bigger your deposit, the better. Not only will it broaden the choice of mortgages available, but you’ll also likely qualify for a better deal. And a better deal = lower monthly payments. Happy days!
• Buying with someone else—If you’re buying a house with a partner, friend or family member, your chances of securing a mortgage increase. You’ll likely boost your deposit savings and be able to borrow more—particularly if they have a good income and credit history.

Sometimes you may have to wait a couple of years to get things like deposits in place. But the wait will be worth it. Good luck!

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