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How do lenders decide whether someone should be given a mortgage?

How do they decide?

Lenders need to follow strict suitability guidelines when approving someone for a mortgage. To make sure they are lending responsibly, they have to carry out checks on all applicants. These are called affordability assessments. They take into account your income, debt, future plans and any past issues you may have had with credit. These checks are more aimed at lending responsible amounts of money, rather than saying yes or no to an application.

There are several fairly clear requirements for taking out a loan. You need stable income and savings to use for a deposit if you want to take out a loan. You will also need a solid credit history. Without these three things, you’ll struggle to find a mortgage provider who will approve you. 

Who are lenders?

Mortgage lenders can be split into two groups: banks and building societies. In the past, these two groups were fairly distinct. In the 1980s building societies were offered the chance to demutualise. This helped them to keep up competition with banks, giving them many of the same rights as the banks. There is no hard and fast rule about which offer better rates, it just depends on your circumstances. All lenders are regulated by the Financial Conduct Authority, and this regulation should create a level playing field between them.

What makes someone viable

There are some fairly consistent rules as to what qualifies someone for a mortgage. First things first you will need a solid and consistent income. Being unemployed will make it almost impossible to get a mortgage (sorry guys). Having a good credit history is also key to being approved for a mortgage. Issues such as CCJs, IVAs, bankruptcies and loan defaults will all affect your chance of a successful mortgage application. Further information on mortgage eligibility can be found here, courtesy of the Money Advice Service.  


This is the process where lenders analyse the risk of lending you money. This assesses the likelihood that you will default on the loan, and the outcome of the application hangs on it. All of the documents that lenders will want are analysed for any warning signs pointing towards high risk. Whilst this might all sound cold and unreceptive, lenders have good reason to be so careful. The financial disaster that was 2007-2012 was spurred on by subprime lending, which means lending to people who can’t afford it. Subprime lending on a mass scale caused financial institutions to topple, and this is a situation none of us wants to see again. This is why the FCA is so strict with lenders, ensuring they are lending money responsibly.

Still not clear?

If you’re still wondering about whether you will be eligible for a mortgage, head over to our Digital Mortgage Adviser. Within minutes you can have an idea of what you could expect to borrow, all for free and without any credit checks. Our Habito Mortgage Illustration will show a breakdown of a suitable mortgage product, including monthly repayments and which lender is offering the deal. If you want to find out more, the next step is a quick chat with one of our friendly mortgage experts. They can answer any questions you might have concerning mortgage eligibility. Our mortgage experts will guide you through your application from sign-up to completion.

This is all part of our mortgage promise. We want to find you the right mortgage, whilst saving you time and money. This allows you to focus on the things most important to you, and get one step closer to mortgage bliss.

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