Week Six- What is the lender looking at?
Buying a home in the UK in 2026 comes with more paperwork and stricter checks than ever. From affordability assessments to credit history reviews, understanding how lenders make their decisions can save you time, stress, and even money. In this guide, we break down the mortgage underwriting process, the documents you’ll need, the difference between an Agreement in Principle (AIP) and a full mortgage offer, and practical tips to avoid rejection.
What Banks Look For: Affordability, Risk, and Stability
When lenders review your mortgage application, they’re essentially asking three questions:
- Can you afford the mortgage?
Lenders calculate affordability by comparing your income to your outgoings, factoring in monthly bills, existing debts, and the potential mortgage payment. In 2026, affordability checks are even stricter, with lenders considering interest rate rises and stress-testing your ability to pay if rates increase. - Are you a low-risk borrower?
Lenders evaluate your financial history, including credit scores, previous borrowing behaviour, and any history of missed payments. The goal is to minimise the risk of default. - Do you have financial stability?
Stability is key. Lenders prefer applicants with steady employment or a consistent income history. For self-employed applicants, regular and verifiable earnings over the past 2–3 years are usually required.
Documents You’ll Need and How Far Back Lenders Check
Being prepared with the right documentation can speed up the process. Common documents include:
- Proof of income: Payslips (last 3 months), P60, or tax returns if self-employed.
- Bank statements: Typically 3–6 months, but some lenders may request up to 12 months.
- Identification: Passport, driver’s licence, or other government-issued ID.
- Proof of address: Utility bills or council tax statements.
Lenders may also check your financial history back 3–6 years, especially for credit events such as missed payments or county court judgments (CCJs).
AIP vs Full Offer: What’s the Difference?
- Agreement in Principle (AIP) / Decision in Principle (DIP):
This is a conditional statement from a lender outlining how much you might be able to borrow. It’s useful for house hunting but is not a guarantee. - Full Mortgage Offer:
The full offer is issued once the lender has verified all documents and completed their detailed underwriting. This is a legally binding commitment to lend, subject to standard conditions like valuation.
How to Avoid Getting Rejected
- Check your credit report early: Correct any errors before applying.
- Keep your finances stable: Avoid taking on new debts or making large purchases before applying.
- Be thorough with documentation: Missing paperwork can delay or derail your application.
- Understand affordability: Use online calculators to estimate what you can realistically borrow.
- Consider a mortgage broker: They can guide you to lenders most likely to approve your application.
Getting a mortgage in 2026 is more about preparation than luck. By understanding what lenders are looking for, keeping your finances in order, and knowing the difference between an AIP and a full offer, you’ll increase your chances of a smooth approval process.
Emily's Mortgage Services LTD 