Find out how much house you can borrow before you start looking – and how you can make the strongest offer possible on the property you choose. If you’re ready to make your dream of owning a home a reality, you’ve probably already heard that you should consider getting prequalified or preapproved for a mortgage. It’s time to understand exactly what each of those terms means and how they might help you. And when you’re working toward a goal this big, you want every advantage. You may qualify to borrow more money than you are comfortable spending on a home. But that doesn't mean you have to spend more. It's a good idea to limit
your home search to houses priced at an amount you can comfortably afford. Explore the mortgage amount that best fits into your overall budget by using Bank of America's Home Affordability Calculator. Prequalification is an early step in your
homebuying journey. When you prequalify for a home loan, you’re getting an estimate of what you might be able to borrow, based on information you provide about your finances, as well as a credit check. Prequalification is also an opportunity to learn about different mortgage options and work with your lender to identify the right fit for
your needs and goals. Preapproval is as close as you can get to confirming your creditworthiness without having a purchase contract in place. You will complete a mortgage application and the lender will verify the information you provide. They’ll also perform a credit check. If you’re preapproved, you’ll receive a preapproval letter, which is an offer (but not a commitment) to lend you a specific amount, good for 90 days. Expect surprises! Lenders look at every detail of your finances when granting preapproval. You might be asked about a car loan payment you made with a credit card, for example. Be prepared to answer lender questions as soon as they come up. Aside from their distinct roles in homebuying, prequalification and preapproval can take different amounts of time. Prequalifying at Bank of America is a quick process that can be done online, and you may get results within an hour. For mortgage preapproval, you’ll need to supply more information so the
application is likely to take more time. You should receive your preapproval letter within 10 business days after you’ve provided all requested information.
Which is right for me?First-time homebuyers are more likely to find that getting prequalified is helpful, especially when they are establishing their homebuying budget and want an idea of how much they might be able to borrow. Preapproval can be extremely valuable when it comes time to make an offer on a house, especially in a competitive market where you might want to stand out among other potential buyers. Again, a seller will be more likely to consider you a serious buyer because you have had your finances and creditworthiness verified. PREQUALIFICATION VS. PRE-APPROVAL COMPARISON
Find out what lenders look for when assessing mortgage applications and increase your chances of getting your loan approved with this ultimate guide. Get started with a broker Ask Us A Question Ask a quick question We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects. Ask us a question and we'll get the best expert to help.  No impact on credit score 4.8 out of 5 stars across Trustpilot, Feefo and Google! Our customers love Online Mortgage Advisor
Which lenders have you already tried?Select the tiles below to continue: With the unpredictability of the mortgage market, we want you to have complete confidence in our service, and trust that you're getting the best available rate and the highest chance of mortgage approval. If you're concerned or confused about what to do next, Get In Touch and we'll match you with a Specialist who'll give you the right advice for you and your circumstance. Aspiring property owners often worry about getting approved for a mortgage. After all, it’s usually the most crucial part of the homebuying process, but it can feel daunting. However, by doing your research and getting to grips with what lenders look for when assessing mortgage applications, you can better prepare yourself and hopefully alleviate much of the stress involved. In this comprehensive guide, we explain everything you need to know about getting your mortgage approved, including lenders’ standard eligibility criteria, how they calculate affordability and how a broker can help you. Read on for more information or jump to the section that’s relevant to you via the links below… What are you looking for? What criteria do you need to meet to get approved for a mortgage?Every lender has its own set of criteria when it comes to assessing mortgage applications, but, in general, they’ll consider the following: Your ageThe vast majority of lenders require residential mortgage applicants to be at least 18 years old. They also tend to have a maximum age limit too. This can either be the age you are when you take out the mortgage (typically the maximum is 75 or 80) or the age you’ll be when your mortgage term ends (this tends to range from 75 to 95). Your employment statusLenders will take a keen interest in your employment type. This will help them determine how much and how regularly you’re paid. If you’ve been employed for a number of years, receive a regular salary and meet all other lending criteria, you shouldn’t have too much trouble getting approved. If, however, you’re in what’s deemed ‘non standard’ employment – for example you’re self-employed, you work part-time or you’re a contractor – it could be a bit trickier, but not impossible, to get your application approved. The type of property you’re buyingIf you’re buying a non-standard property – such as a house with a thatched roof, a flat above a shop, or a barn conversion – this could be a red flag for lenders because of concerns over resale potential if they have to repossess your home in the future. That’s not to say you can’t get a mortgage if you’re purchasing a non-standard property. You may just have a more limited choice of lender. Your credit ratingAll lenders will look at your credit reports to establish how good you’ve been at paying back loans in the past. Credit reports contain detailed information about your loan history, including past credit cards, overdrafts, mortgages and mobile phone agreements. They record how much credit you were given and how efficient you were at making the repayments. You can still get a mortgage if you have black marks on your credit reports. It may, however, impact the range of deals available to you. If you have particularly bad credit, it’s worth seeking advice from a bad credit broker who specialises in securing loans for people in this situation. The size of your depositLenders will always take into consideration the size of your deposit. Generally, the larger your deposit, the greater the chance you’ll have of getting your mortgage approved and the more deals you’ll have available to you. That’s because the more money you have invested in the property, the less risky you’ll be deemed. Speak to an expert about mortgage approvalHow much you need to earnSome lenders impose a minimum earnings requirement of say £20,000 – £25,000 on mortgage applicants, but this certainly isn’t standard across the industry. In fact, these days most lenders don’t solely focus on annual earnings to determine if you’ll be able to afford your mortgage. They look at the bigger picture and consider other forms of income – including bonuses, commission, pensions and even benefits – as well as your outgoings, credit history and other credit commitments. Each lender uses its own unique criteria to assess affordability, but in general, most lenders will offer 4-4.5 times your income. However, some will stretch to 5 and a handful as much as 6. To get a rough estimate of how much you’d be able to borrow with your income, try our mortgage approval calculator here: Mortgage Affordability CalculatorOur affordability calculator can tell you how much you can potentially borrow from a mortgage lender. Simply enter your total household income below and our calculator will do the rest. Your Income
Input full salaries for all applicants You could borrow up toGet Started with an expert broker to find out exactly how much you could borrow. For a more accurate figure, speak to a qualified broker who’ll be able to assess your individual circumstances. Need help finding a broker? Get in touch and we’ll match you with one from our extensive network. Can you be pre-approved for a mortgage?Yes. If you want to discover your chances of being approved before you start house hunting, you can apply for a mortgage pre-approval or agreement in principle. This is a statement from a lender outlining how much they’re prepared to lend you, before you formally apply for a mortgage. While it’s not a guarantee, it gives you a pretty good idea of how much you’ll be able to borrow. Rated excellent by our customersHow to get approved for a mortgageHere’s a summary of the steps you need to take to get your mortgage approved. Save as much deposit as possible and be able to prove where the money’s come fromThe bigger your deposit, the better your chances of getting approved and the faster the process should take. You’ll also have a wider choice of products and deals to choose from. You’ll need to be able to prove where your deposit has come from. Lenders have strict anti-money laundering rules in place to make sure money used for mortgage deposits is legitimate. There are various ways to prove where your funds have come from, including bank or savings account statements, evidence of a sale of a property or proof of an inheritance. Get your credit reports in orderBefore you make an application, check your credit reports. You should make sure all the details are accurate and that you’ve been delinked from anyone you previously had joint accounts with. If there are any errors on your report, you have the right to challenge them, or at the very least add a note explaining any late or missed payments. Speak to a brokerThere’s nothing stopping you applying directly to a lender. However, if you want to boost your chances of getting approved, you’re best off speaking to an experienced broker. They’ll be able to assess your circumstances and determine whether or not you meet a lender’s eligibility and affordability criteria. This will save you the stress and expense of wasted applications. If you don’t meet their criteria, the broker will be able to recommend a specialist lender who’ll be more likely to approve your application. Whole-of-market brokers have relationships with a host of different lenders and will be able to talk to them on your behalf and help secure you the most competitive deal. The brokers in our network have years’ of experience helping applicants get mortgages approved. Get in touch today and we’ll match you with an expert today. We're so confident in our service, we guarantee it. We know it's important for you to have complete confidence in our service, and trust that you're getting the best chance of mortgage approval at the best available rate. We guarantee to get your mortgage approved where others can't - or we'll give you £100*
Is the criteria any different if you have bad credit?Again, every lender will have its own criteria when it comes to assessing applicants with bad credit. However, in general, they’ll typically look at the following:
What about if you’re self-employed?Being self-employed won’t prevent you from getting a mortgage. However, you may have to jump through a few more hoops to get approved. The majority of lenders will base their lending decision on your income over the last three years. Some will only require two years’ accounts, while a handful of specialist lenders will accept just one year. Get matched with a broker to guide you through a successful applicationGetting a mortgage approved is exciting, but the build up can be a stressful experience. That’s why you should strongly consider seeking advice from an experienced broker who’ll be able to research and identify the best deal for your circumstances, walk you through the application process and improve your chances of getting accepted. Our broker matching service can connect you with an expert who can help you today. Give us a call on 0808 189 2301 or make an enquiry and get matched with a broker for a free initial conversation. Speak to an expert about mortgage approvalAsk a quick question We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects. Ask us a question and we'll get the best expert to help. Related ArticlesAbout the author Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background. Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course! Read more about Pete Pete Mugleston Mortgage Advisor, MD Continue Reading*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it. |
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