What is the minimum credit score for a mortgage?

There is no minimum credit score, per se, to qualify for a mortgage, but you can certainly use a bit of common sense to estimate whether you will get one or not.

Banks need to give people mortgages and loans in general, that’s how they make money. If you borrow around £100,000 at 5% you will pay close to £5,000 in interest alone in your first year and over the life of a mortgage you will probably pay close to £100,000 in interest; that’s on top of the £100,000 loan itself.

So you can see why banks want your custom…

For them the only real question is whether you will be able to consistently make payments for the life of the mortgage or not. Basically, can they trust you to be financially responsible for the next 25 years or so?

The main criteria they are interested in will be:

How financially responsible are you?

In essence, your credit score is a record of how well you handle being in debt. You might earn loads but if you spend it all on things you don’t need and forget to leave enough to pay your mortgage they will have to chase you.

Can you afford to pay it back?

People often forget about this aspect, but it’s an important one. You might have a flawless credit history, but if you have no income the bank won’t trust you with their money. The more you earn, the more you can afford and the bank will weigh up what they think you can afford with what you want to borrow. If you can ‘afford’ to borrow £200,000 and you ask them for £80,000 you won’t need such a good history as if you wanted to borrow £210,000.

How secure is your income?

Banks like stability, because as much as you might have plenty of money right now, there’s no way you can know whether you will still have a job in 10 years’ time. There is no real way to predict this, but the longer you have been consistently employed, the better your chances. If you happen to be self-employed chances are you will need a much stronger credit history.

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