Introduction.
The best time to prepare for a mortgage is months before you need one. Small changes made early can improve the rate you are offered, the amount you can borrow and how quickly an application goes through.
Lenders look at four things: your income, your outgoings, your credit history and your deposit. Each can be strengthened with a little planning.
This guide explains what lenders look for, what can count against you and what to gather now, so that your application is ready the moment you find the right property.
Most lenders review your last three months of bank statements and payslips. Start tidying them now.
01Know your numbers.
Lenders set a maximum loan from your income, then check that the monthly payments are affordable after your commitments.
Income multiples
Most lenders lend around 4 to 4.5 times gross annual income. Some go to 5 or 5.5 times for higher earners or certain professions, usually with a larger deposit.
Affordability
Credit cards, loans, car finance, childcare and maintenance all reduce what a lender will offer. Clearing or reducing a commitment can increase your borrowing.
Variable income
Bonuses, overtime and commission are often averaged over one or two years and some lenders use only a proportion. Self-employed income is usually assessed from your last two years’ figures.
| Gross income | At 4.5× | At 5× |
|---|---|---|
| £40,000 | £180,000 | £200,000 |
| £60,000 | £270,000 | £300,000 |
| £80,000 | £360,000 | £400,000 |
| £120,000 | £540,000 | £600,000 |
Illustrative maximums before commitments. Lenders assess affordability in detail and may lend more or less.
Try the calculators
Our affordability and income change calculators at artilliumfinance.com give a quick first indication.
02Your credit file.
Your credit file tells a lender how you have managed borrowing in the past. Check it early, because errors take time to correct.
Check all three agencies
Lenders use Experian, Equifax and TransUnion. Each can hold slightly different information, so check all three. Statutory reports are free.
Register to vote
Being on the electoral roll at your current address helps lenders confirm who you are and where you live.
Financial associations
A joint account or loan links your file to the other person. If you have separated from someone, ask the agencies to remove the link once the joint account is closed.
Late payments and defaults
Recent missed payments matter most. Older, settled issues count for less, and some lenders specialise in helping people with past credit problems.
In the months before you apply
- Pay every bill on time, by direct debit if possible
- Keep credit card balances low compared with the limit
- Avoid new credit applications, including car finance
- Avoid using buy now pay later where you can
- Close accounts you no longer use only if they are not your oldest
- Correct any errors with the agency in writing
03Building your deposit.
A larger deposit lowers your loan to value. Each step down, typically at 90%, 85%, 75% and 60%, usually unlocks better rates.
Show where it came from
Lenders and solicitors must confirm the source of your deposit. Savings built up over time in your own account are simplest. Large or unusual transfers need explaining.
Gifted deposits
A gift from family is widely accepted. The person giving it signs a letter confirming it is a gift, not a loan, and provides identification and evidence of their own funds.
Lifetime ISA
A Lifetime ISA adds a 25% government bonus to savings of up to £4,000 a year for first-time buyers buying a home costing £450,000 or less. Check the rules before you open one or withdraw.
| Loan to value | Deposit on £400,000 |
|---|---|
| 95% | £20,000 |
| 90% | £40,000 |
| 85% | £60,000 |
| 75% | £100,000 |
| 60% | £160,000 |
Moving savings between accounts close to applying adds paperwork. Keep your deposit in one place where you can.
04Bank statements & spending.
Underwriters read your recent bank statements line by line. They are checking that your income arrives as stated and that your spending fits the mortgage.
What stands out
Regular gambling transactions, frequent overdraft use, returned direct debits and payday loans can all lead to questions or a decline.
Commitments you forgot
Subscriptions, phone contracts and buy now pay later plans add up. Lenders will see them, so list them for us up front.
Income evidence
Salary should arrive from your employer as shown on your payslips. Cash income or transfers from your own other accounts may need explaining.
Adviser’s note
We read your statements before the lender does. If anything needs explaining, we explain it in the application rather than wait to be asked.
05Documents checklist.
Gathering these now means your application can go in the day you agree a purchase.
Everyone
- Passport or driving licence
- Proof of address dated in the last three months
- Three months of bank statements for every current account
- Evidence of your deposit and where it came from
- Gift letter and donor ID, if your deposit is a gift
- Details of loans, cards and other commitments
Employed
- Last three months of payslips
- Latest P60
- Contract or offer letter if you have recently started
Self-employed and company directors
- Two years of SA302 tax calculations and tax year overviews
- Or two years of accounts prepared by an accountant
- Business bank statements, if requested
Other income
- Bonus or commission history, often two years
- Rental income: tenancy agreements and tax returns
- Pension or benefit award letters
Keep them digital
Clear PDFs or scans of every page, including blank pages of statements, avoid delays.
06Your 12-month plan.
You can apply sooner, but this timeline gives you the strongest position.
Check your credit
Get all three credit reports, correct errors and register to vote.
12 months beforeSet a saving plan
Decide your deposit target and keep it in one account.
12 months beforeReduce commitments
Pay down cards and avoid new credit or finance agreements.
6 months beforeSpeak to us
We review your numbers, explain your options and flag anything to fix.
3 to 6 months beforeTidy your statements
Keep spending steady and avoid anything that needs explaining.
3 months beforeAgreement in principle
Get a lender’s initial decision so you can show agents you are ready.
Before viewingAlready have a mortgage?
The same steps apply to remortgaging. Start reviewing around six months before your current deal ends.
07Agreement in principle.
An agreement in principle, sometimes called a decision in principle, is a lender’s initial indication of how much it would lend you.
Why it helps
Estate agents and sellers take you more seriously. It also confirms your budget before you start viewing.
Soft or hard search
Some lenders use a soft search that is not visible to other lenders; others use a hard search that is. We choose carefully and avoid unnecessary searches on your file.
How long it lasts
Most agreements in principle last 30 to 90 days and can be renewed. It is not a guaranteed offer; the full application, valuation and underwriting follow.
After you find a home
| Stage | Typical timing |
|---|---|
| Full application submitted | Days |
| Valuation | 1 to 2 weeks |
| Underwriting | 1 to 3 weeks |
| Mortgage offer | 2 to 4 weeks |
Illustrative. Timings vary by lender and case.
08Illustrative cases.
A buyer one year out
A first-time buyer with a small deposit, two credit cards near their limits and an old mobile phone default.
- Challenge
- High card balances and a default holding back the rate
- Approach
- A plan to reduce balances, settle the default and save into one account
- Outcome
- Twelve months later, a mainstream lender at a better rate
A director ready to move
A company director whose income had grown, but whose latest accounts were not yet filed.
- Challenge
- Lenders assessing older, lower figures
- Approach
- Timing the application after the new accounts and choosing a lender that uses the latest year
- Outcome
- Borrowing based on current income, agreed before viewing
These examples are illustrative and do not describe real clients.
09Questions and glossary.
Questions we are often asked
Will checking my credit file harm my score?
No. Checking your own file is a soft search and is not seen by lenders.
How soon after a job change can I apply?
Some lenders accept a new job from day one, particularly in the same line of work. Others want to see a probation period completed.
Should I pay off my credit card before applying?
Reducing balances usually helps. Talk to us first if it would use your deposit savings.
Does an agreement in principle guarantee a mortgage?
No, but it is a strong early indication.
Glossary
- Loan to value
- The loan as a percentage of the property value.
- Income multiple
- How many times your income a lender will lend.
- Soft search
- A credit check not visible to other lenders.
- Hard search
- A credit check visible on your file.
- SA302
- An HMRC tax calculation for the self-employed.
- Gifted deposit
- Deposit money given, not lent, by family.
- Underwriting
- The lender’s detailed review of your application.
- AIP
- Agreement in principle.
Related: First Time Buyers · All guides · Calculators