Top 10 Questions Mortgage Lenders Ask and Why

1. What Are Your Earnings and Income Sources?

Your mortgage lender will first ask you to declare your income and earnings sources. This helps them estimate your ability to handle monthly mortgage payments.

Are you employed? Be upfront about your gross annual salary and provide recent payslips as proof. But remember, income goes beyond just a job.

Make sure to disclose any other earnings like:

• Self-employment profits (with 2-3 years’ accounts)
• Rental income from investment properties
• Investment dividends
• State pensions/benefits
• Child maintenance payments received

The more transparent you are about your total household income, the better. This allows your lender to accurately assess your mortgage affordability based on your complete financial picture.

2. How Much is Your Monthly Expenditure?

Along with your income, mortgage providers will scrutinise your typical monthly expenditure very closely. 

Make a comprehensive list of all regular payments like:

• Rent/current mortgage
• Council tax and utility bills (gas, electricity, water)
• TV/broadband packages
• Transport costs (car payments, public transport fares)
• Grocery and household spend
• Insurances (home, car, life, etc.) and subscriptions
• Loan/credit card repayments
• Childcare or child maintenance

Having bank statements showing 3+ months of transactions can help back up your stated expenditure figures. 

Ultimately, lenders want evidence that you manage your money responsibly and can comfortably afford mortgage payments on top of your living expenses.

3. Do You Have Any Existing Debts?

Your mortgage lender will also want a complete picture of any existing debts you have.

This helps them understand your overall credit commitments and your history of repaying them.

It’s better to be upfront about any outstanding debts like:

• Credit cards
• Personal loans
• Hire purchase agreements
• Court judgements/decrees
• Debt management plans

Having some existing borrowing is usually okay, provided you can evidence a good, consistent repayment history over 12-24 months. 

Lenders are wary of approving mortgages if your existing debts are so high that adding mortgage payments would strain your finances too much.

4. Where Is Your Deposit Coming From?

If your deposit has been diligently saved from your income over time, provide statements showing the buildup of funds. 

Deposits can also come from:

• Gifts from family (with a gift letter)
• An inheritance (with legal documentation)
• The sale of another property (with proof of sale and funds transfer)

Whatever the source, be transparent with your lender and provide any valid proof you have. The clearer your deposit’s paper trail, the smoother your mortgage approval will be.

5. What Is Your Current Employment Situation?

How you earn a living heavily influences what mortgage deals and loan amounts you’ll qualify for.

For employed applicants, state your job title, whether you’re in a permanent or contract/temporary role, time at your employer and any foreseeable changes coming up like job moves or promotions. 

Being able to showcase a continuous, stable employment history strengthens your mortgage application.

If you’re self-employed, have around 2-3 years’ worth of accounts, tax returns and income projections prepared. 

More complex income structures like temporary/agency workers, zero-hours contracts or those with heavy bonus/commission elements will face deeper questioning to satisfy lenders on income sustainability.

6. What Type of Mortgage Product Suits You Best?

With so many mortgage product options, you’ll likely field the question “What type of mortgage product suits you best?” The right product fit depends on your personal priorities and circumstances.

For example:

• Want payment security? Then a fixed-rate mortgage could be best
• Prefer tracking Base Rates? A tracker deal could suit your needs
• Need flexibility to overpay? Consider an offset mortgage
• Or would you feel more comfortable on a longer mortgage term?

An experienced mortgage advisor will guide you through the pros and cons of each major product type to help identify your best fit. 

Their role is to find you a mortgage that’s not just affordable today but over the full loan term.

7. Do You Have Children or Plans to Start a Family?

Your family situations or plans matter.

If you already have kids, be honest about any childcare, education or maintenance costs.

And if you’re looking to have children soon, then your lender will factor the potential loss of income (e.g. paternity/maternity leave) and higher family spending into their calculations.

While starting a family is an exciting time, mortgage lenders must ensure your loan remains affordable even with the added costs that children bring. 

Openly discussing your family plans allows them to properly “stress test” affordability over the long mortgage term.

9. What Are Your Potential Long-Term Housing Plans?

Your mortgage lender isn’t just interested in your current property purchase—they also want to know your longer-term housing plans. 

For example:

• Are you planning to keep this property as your forever home?
• Do you foresee relocating for job opportunities in the next 5-10 years?
• Are you considering renting this property out if circumstances change?

Your answer gives the lender context about your needs. It helps them advise on mortgage portability if you need to move or suggest a buy-to-let product if you plan to keep the property as a rental investment.

Discussing your housing plans over the full mortgage term helps your lender find the most suitable, future-proofed product for you from the start.

9. What Is Your History With Credit and Borrowing?

Lenders ideally want a squeaky-clean credit report showing a long history of on-time and complete debt repayments.

But realistically, many people have periods of difficulty which can impact their credit file.

If this applies to you, be upfront about any:

• Missed payments or defaults
• County Court Judgements (CCJs)
• Debt management plans enrolled in
• Insolvency events like IVAs, DROs or bankruptcy

And if you’ve taken out a payday loan, know that this can be a red flag for many lenders. Payday loans suggest financial instability and poor money management. 

Even if you’ve handled them responsibly, some lenders may view them negatively.

While these credit issues are serious, many specialist lenders can still offer mortgage products if you’ve shown responsible borrowing before your application. 

Be honest about any previous credit problems when asked. Lenders will check your credit reports, so they should hear any explanations from you first.

10. When Are You Looking to Purchase?

Finally, your mortgage lender will want to understand your timeframe. This lets them plan accordingly and manage resources for:

• Credit checks
• Property valuations
• Mortgage offers and
• Conveyancing arrangements

Are you under pressure to close quickly due to an accepted offer? Let them know. Still house-hunting without a deadline? Be upfront. Setting clear expectations from the start ensures a smoother, less stressful mortgage process.

While answering these detailed questions might feel intense, remember lenders have a duty to you. 

Openness and honesty about your finances and situation allow them to find the most suitable, long-term mortgage for your needs.