The UK mortgage market is changing, and with rising interest rates and stricter lending criteria, securing a mortgage in 2025 requires thorough preparation. Whether you're a first-time buyer, moving home, or remortgaging, understanding what lenders are looking for can give you the best chance of approval.
What are lenders looking for?
At Steel & Co. Financial, we specialise in helping buyers navigate this process smoothly, ensuring you get access to the best mortgage deals tailored to your financial situation. Whether you're a first-time buyer, remortgaging, or investing in property, we’re here to guide you every step of the way.
Here’s what lenders will be looking for in 2025 and how Steel & Co. Financial can help you secure your mortgage.
1. A Strong Credit Score is Key
Your credit score is one of the first things lenders check. It helps them assess how responsible you are with credit and whether you’re a high-risk borrower.
How to Improve Your Credit Score Before Applying:
✔ Check Your Credit Report – Use providers like Check My File to get an up to date credit report.
✔ Pay Bills on Time – Missed or late payments can damage your score. Set up direct debits to ensure payments are made.
✔ Reduce Debt – Lenders assess how much debt you already have. Pay down outstanding credit cards, loans, and overdrafts.
✔ Avoid New Credit Applications – Each credit check leaves a mark on your report. Avoid unnecessary applications in the 6–12 months before applying for a mortgage.
✔ Use Less of Your Credit Limit – If you have credit cards, try to use less than 30% of your credit limit to demonstrate responsible usage.
✔ Register on the Electoral Roll – Being registered at your current address can improve your credit score and help lenders verify your identity.
💡 Ideal Credit Score for a Mortgage: A ‘good’ credit score (700+ on Experian) increases your chances of securing a mortgage with competitive interest rates. However, lenders look beyond just the number—they assess your full credit history.
How Steel & Co. Financial Can Help: We’ll review your credit report, identify areas for improvement, and advise on the best steps to take before you apply for a mortgage.
2. Stable Income and Employment History
Lenders want to see a consistent and reliable income to ensure you can keep up with mortgage payments.
What Lenders Look For:
✔ Employment Stability – A steady job history of at least 6–12 months in the same role or industry. Changing jobs frequently can raise concerns.
✔ Payslips and Bank Statements – Typically, you’ll need to provide three to six months' worth of payslips and corresponding bank statements.
✔ Self-Employed Applicants – If you’re self-employed, you’ll need at least two years of accounts signed off by an accountant, along with SA302 tax calculations from HMRC.
✔ Additional Income Sources – If you earn commission, bonuses, rental income, or child maintenance, be prepared to show proof. Some lenders may only consider a portion of these earnings.
📌 Top Tip: If you’re planning to apply for a mortgage, avoid job changes or switching to self-employment, as lenders prefer a stable employment history.
How Steel & Co. Financial Can Help: We work with lenders who specialise in helping self-employed clients, contractors, and those with complex income streams, ensuring you get the best possible deal.
3. Affordability Checks: Can You Really Afford It?
Since the 2008 financial crisis, lenders have tightened affordability checks to prevent excessive borrowing. They will scrutinise not just how much you earn, but how much you spend.
Lenders Will Assess:
✔ Debt-to-Income Ratio – Your total monthly debt repayments (including credit cards, loans, and overdrafts) should ideally not exceed 40% of your gross income.
✔ Everyday Spending – Banks will analyse your bank statements to see where your money goes, including subscriptions, gym memberships, and dining out.~
✔ Future Interest Rate Increases – Mortgage lenders conduct a ‘stress test’ to check if you could still afford repayments if interest rates rise by 2–3%.
💡 How to Improve Affordability:
✔ Reduce unnecessary spending at least six months before applying.
✔ Close unused credit accounts and pay off outstanding loans.
✔ Avoid large transactions (such as holidays or luxury purchases) close to your application date.
How Steel & Co. Financial Can Help: We conduct a pre-application affordability assessment to see how much you can borrow before you apply. This ensures you don’t get rejected due to affordability concerns.
4. Deposit Size: The Bigger, The Better
The amount you put down as a deposit directly affects the mortgage deals available to you.
How Much Deposit Do You Need?
✔ 5% Deposit – Minimum for most mortgages, but you’ll be limited to 95% loan-to-value (LTV) products.
✔ 10% Deposit – Opens up better interest rates and more lender options.
✔ 20%+ Deposit – Gives you access to the best rates, lowers monthly payments, and makes you a lower-risk borrower.
Ways to Boost Your Deposit:
✔ Help to Buy & Lifetime ISA – First-time buyers can use these to boost savings with a 25% government bonus.
✔ Gifted Deposits – Some lenders accept deposits gifted by family members.
✔ Equity from a Previous Property – If you're moving home, you may use equity from your current property.
📌 Remember: A bigger deposit means lower monthly repayments and better mortgage deals.
How Steel & Co. Financial Can Help: We help buyers explore government schemes such as the Lifetime ISA and Shared Ownership, as well as alternative ways to boost deposits, such as gifted deposits from family members.
5. Proof of Responsible Financial Behaviour
Lenders want to see that you manage your money well.
How to Show You’re a Responsible Borrower:
✔ Keep a Consistent Bank Balance – Avoid frequent overdraft use.
✔ Save Regularly – Even small, consistent savings demonstrate good financial habits.
✔ Avoid Payday Loans – Many lenders see payday loans as a red flag.
💡 Tip: Lenders check spending habits, so cut back on non-essential expenses at least six months before applying.
How Steel & Co. Financial Can Help: We’ll review your financial history and suggest improvements before you apply, increasing your chances of approval.
6. Choosing the Right Mortgage Product
There are different mortgage types to suit different financial situations:
✔ Fixed-Rate Mortgage – Keeps repayments the same for a set period (2, 5, or 10 years). Good for budgeting but may have higher initial rates.
✔ Tracker/Variable Rate Mortgage – Follows the Bank of England base rate, meaning repayments can go up or down. Good for those comfortable with risk.
✔ Help to Buy & Shared Ownership – Ideal for first-time buyers with smaller deposits.
✔ Interest-Only Mortgages – Lower monthly payments but require a repayment plan for the capital.
How Steel & Co. Financial Can Help: We compare the whole market to find the best mortgage product for you—saving you time and money.
7. Why Using Steel & Co is a Smart Move
A mortgage broker like Steel & Co. Financial can:
✔ Access exclusive mortgage deals not available directly to consumers.
✔ Guide you through complex paperwork, making the process stress-free.
✔ Provide insider knowledge on which lenders are best for your situation.
✔ Help you avoid common mortgage pitfalls that could lead to rejection.
Many people assume going directly to a bank is the best option—but banks only offer their own products. We compare the entire market, ensuring you get the best possible deal.
8. Hidden Costs You Should Budget For
Beyond your mortgage deposit, consider additional costs:
✔ Stamp Duty – Varies depending on property value and first-time buyer status.
✔ Legal Fees – Solicitor fees typically range from £1,000–£2,000.
✔ Survey Costs – Homebuyer reports and full structural surveys can cost £250–£1,500.
✔ Broker Fees – Some brokers charge fees, while others work on commission from lenders.
📌 Budget for at least 10–15% more than your deposit to cover additional costs.
How Steel & Co. Financial Can Help: We provide a full cost breakdown before you apply, so there are no surprises.
Final Thoughts: Preparation is Key
Securing a mortgage in 2025 is about more than just income—it’s about proving financial responsibility, reducing risk, and choosing the right mortgage product.
At Steel & Co. Financial, we help you navigate the complex mortgage landscape, ensuring you get the best possible deal.
🚀 Ready to start your mortgage journey? Contact us today and let’s make your homeownership dream a reality!
📩 Get in touch for expert mortgage advice now!
Your home may be repossessed if you do not keep up repayments on your mortgage.