If you’re applying for a mortgage in the UK, lenders will carry out mortgage affordability checks to determine how much you can borrow. These checks assess your income, expenses, credit history, and overall financial situation to ensure you can afford the repayments.
Understanding how affordability checks work can help you prepare your finances and increase your chances of mortgage approval. This guide explains what lenders look for, what documents you need, and how to improve your affordability score.
What is a Mortgage Affordability Check?
A mortgage affordability check is an assessment conducted by lenders to ensure you can afford the repayments on a mortgage. This is a requirement set by the Financial Conduct Authority (FCA) to prevent borrowers from taking on loans they cannot manage.
Lenders look at various financial factors, including:
Your income (salary, bonuses, rental income, or self-employment earnings)
Your monthly expenses (bills, debts, childcare, subscriptions, etc.)
Your credit score and history
Your deposit amount and loan-to-value ratio (LTV)
Potential future financial changes (e.g., interest rate increases)
What Do Lenders Assess During Mortgage Affordability Checks?
1. Income Assessment
Lenders will verify your earnings to determine how much you can afford to borrow. They may consider:
Employment income (salary and bonuses)
Self-employed earnings (tax returns and business accounts)
Rental income (if you let out a property)
Pension income (if applicable)
You’ll typically need to provide payslips (for employed applicants) or tax returns (for self-employed applicants) as proof of income.
2. Monthly Expenses and Outgoings
Your lender will review your financial commitments to assess how much disposable income you have after paying for essentials. They will consider:
Household bills (utilities, council tax, insurance)
Loan repayments (credit cards, car finance, personal loans)
Childcare costs and dependents
Subscription services and leisure spending
Reducing unnecessary expenses before applying for a mortgage can improve your affordability assessment.
3. Credit Score and History
Lenders check your credit score and credit history to determine your reliability as a borrower. They will review:
Any missed payments or defaults
Your overall debt levels
Your history of managing credit responsibly
A higher credit score can increase your borrowing potential and help you secure a better mortgage rate.
4. Loan-to-Value Ratio (LTV)
The LTV ratio represents the percentage of the property price that you’re borrowing. For example, if you’re buying a £200,000 home with a £40,000 deposit, your LTV is 80%.
Lenders prefer lower LTV ratios because they pose less risk. A larger deposit (e.g., 15–20%) can improve affordability and eligibility.
5. Future Financial Stress Tests
Lenders conduct stress tests to see if you could still afford repayments if interest rates rise.
They may assess:
Potential increases in mortgage rates
Changes in your employment status
Unexpected financial emergencies
How to Improve Your Mortgage Affordability Score
If you’re worried about passing affordability checks, there are steps you can take to strengthen your application:
1. Reduce Unnecessary Expenses
Before applying, cut back on discretionary spending such as:
Streaming services
Gym memberships
Non-essential shopping
2. Pay Down Debts
Reducing outstanding loans and credit card balances can improve your affordability assessment.
3. Save for a Larger Deposit
A higher deposit reduces your LTV, making you less risky to lenders and increasing your chances of approval.
4. Check Your Credit Score
Review your credit report through agencies like Experian, Equifax, or TransUnion. If your score is low, work on improving it before applying.
5. Avoid New Credit Applications
Taking out new loans or credit cards before applying for a mortgage can negatively impact your affordability score.
Frequently Asked Questions About Mortgage Affordability Checks
1. What is the maximum mortgage I can afford?
Lenders usually lend 4 to 4.5 times your annual income, but this depends on your credit score, expenses, and deposit.
2. How long do affordability checks take?
Most lenders complete affordability checks within a few days, but complex applications (e.g., self-employed borrowers) may take longer.
3. Can I fail a mortgage affordability check?
Yes. If your income is too low, your expenses are too high, or you have a poor credit score, a lender may decline your application. You can reapply after improving your finances.
4. Do all mortgage lenders use the same affordability criteria?
No. Each lender has its own affordability calculations, so if one declines you, another may approve your application.
5. Do mortgage affordability checks affect my credit score?
Some lenders perform a soft credit check (which doesn’t impact your score), while others conduct a hard check (which may temporarily lower your score).
Final Thoughts
Mortgage affordability checks are a crucial step in securing a home loan in the UK. Lenders assess your income, expenses, credit history, and financial stability to determine how much you can afford to borrow.
To improve your chances of mortgage approval, focus on reducing debts, increasing savings, and maintaining a good credit score. If you’re unsure about your affordability status, speaking to a mortgage broker can help you understand your options and find the best lender for your financial situation.
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