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  • Hayley Leith

What Do Mortgage Lenders Examine?

Updated: Jul 7, 2021

So you’ve found your dream house, and you’re ready to apply for a mortgage - but your credit score is low. You’re wondering, what do lenders examine in your credit files when you apply for a mortgage? What is it that determines your eligibility for a mortgage?

Whilst mainstream mortgage lenders are most concerned with your credit score when assessing the risk of lending to you, specialist lenders do things a little differently. Very often, they pay no attention to credit scores, wanting to understand your financial background instead. Lenders will conduct a credit check on anyone that applies for a mortgage. However, some black marks on your credit history will carry more weight than others, depending on the amount of money involved and how much time has passed.

There are many factors that could harm your credit score and prevent mainstream lenders from accepting your mortgage application, including:

  • Not having a credit history

  • A low credit score

  • CCJs

  • IVAs

  • In debt management plans

  • Bankruptcy

  • Payday loans

Any of these factors may be a big red flag for most mortgage lenders. However, whatever the circumstances that led to your credit score, there is likely to be a specialist bad credit lender who will assess your application favourably. Specialist mortgage lenders look more closely at a separate list of factors, using each to determine how reliable you would be in repaying a mortgage loan.

Your income and expenditure

The income rules are the same whether applying for an ordinary mortgage or a bad credit mortgage. You must be able to show that you can afford the mortgage payments. Usually, the mortgage amount is capped at 4 to 4.5 times your earnings. However, this depends on the lender and other factors that are considered in the assessment of your application.

The lender will also consider other regular monthly outgoings that you have, and this may affect the multiple of earnings that they are willing to lend to you.

Your bank statement conduct

Your bank statements will give the lenders a good insight into how you manage your spending and give them a good idea if you will be able to keep up with payments on a mortgage now as well as if the interest rate increases in the future. A little work on getting your bank statements mortgage-ready will pay huge dividends. See our article on “how to get your bank statements mortgage ready.”

Your employment type & history

Lenders will want to be confident that you have a stable and regular income. A sudden drop in your earnings could affect your ability to pay the mortgage. Being on probation or having a zero-hour or non-permanent contract could also affect your chances of getting a mortgage.

Your financial history

Lenders will want to examine the type of financial issues that led to your bad credit score. They’ll look at when events happened, what caused them, and more importantly what steps you have taken since to correct the situation.

Loan-to-value (LTV)

Bad credit mortgage lenders usually require a higher deposit, which acts as a cushion in case you default and they need to repossess. Typically, you should expect to pay a deposit of at least 15%. The higher the deposit you are able to pay, the more likely you are to get a mortgage, and the lower the interest rate is likely to be.

Property details

The type of property that you wish to purchase may also affect your mortgage application. Some lenders have different rules about lending for ‘non-standard’ properties (e.g. thatched cottages, homes with an annexe, etc.).

Your personal details

There are many personal factors that affect mortgage applications, including the following:

  • Your age

  • Marital status

  • Employment status (for example, employed or self-employed)

  • Children or other dependents

  • Number of applicants

Different lenders for different bad credit reasons

Specialist lenders in the bad credit mortgage market all have different criteria that they examine applicants against. They also tend to specialise in different types of bad credit issues. For this reason, you should ensure that you use a mortgage broker with:

  • Whole of market access, with links to all bad credit mortgage lenders

  • Broad experience in the bad credit mortgage market

  • Up-to-date knowledge of the mortgage products available for your circumstances

Whether you have a bad credit score or no credit history at all, contact Mortgage Thoughts today. You may be surprised at the mortgage choices that could be available to you.


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Mortgage Thoughts Limited Registered Office: 14 Park Square East, Leeds, LS1 2LF. Registered Company Number: 09528880 Registered in England & Wales.
Authorised and regulated by the Financial Conduct Authority. Financial Services Register No 943629. See more at The information contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK

Our mortgage eligibility tool is operated by Lending Score (a third party) on behalf of Mortgage Thoughts. It is designed to give you an indication of how likely you are to be accepted, should you make a full application for a particular mortgage deal. Your eligibility is determined by a high-level check of your credit record and the additional information you have provided. This does not constitute an offer of credit, and you may be referred or declined once a full assessment of your application has been completed. By providing you with an indicative comparison of mortgage products and the likelihood of you being able to obtain those mortgage products, we don’t look at whether the mortgage is suitable for you and your financial needs. The mortgage eligibility service is not, and should not be construed as, a recommendation, financial or other professional advice. Professional advice should always be sought before taking action. This can be obtained by contacting one of our qualified advisors.

It is important to note that our online mortgage eligibility service only covers a small number of lenders and there are other products available. By contacting one of our advisors we will be able to check your eligibility with a more comprehensive panel of lenders.

Your home may be repossessed if you do not keep up with repayments on your mortgage. Think carefully before securing other debts against your home.  You may have to pay an early repayment charge to your existing lender if you remortgage.

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