What Underwriters Notice First When Reviewing a Mortgage Application

Understanding what underwriters notice first can help borrowers better prepare for a mortgage application. Mortgage underwriting is the process lenders use to assess risk and determine whether a borrower meets their criteria. This applies to both residential and buy-to-let mortgages, although the specific checks may vary depending on the type of loan.

When a lender reviews an application, they typically focus on a combination of financial stability, credit behaviour and affordability. While many borrowers assume that income alone is the deciding factor, underwriters usually take a broader view that includes spending habits, outstanding debts and the property itself.

This guide explores what underwriters notice first and how different factors can influence a lending decision. It also explains how lender criteria may vary, particularly for buy-to-let investors, and highlights common areas that may require closer scrutiny during the underwriting process.

What underwriters notice first: your income and employment

Underwriters typically begin by reviewing income and employment to confirm that a borrower has a stable and reliable source of earnings.

Lenders assess whether income is consistent, sustainable and sufficient to support mortgage repayments. For employed applicants, this often involves reviewing payslips, contracts and employment history. Self-employed borrowers may be asked for tax calculations and accounts covering at least two years. Variations in income, such as bonuses or commission, may be treated differently depending on lender policy.

Employment type can also influence how income is assessed. Permanent roles are generally viewed as lower risk, while contract or freelance work may require additional evidence of continuity. Lenders may apply different affordability calculations depending on how predictable the income appears over time.

For buy-to-let mortgages, personal income may still be relevant, particularly where rental income does not fully meet lender stress testing requirements. In these cases, underwriters may consider whether the borrower has sufficient income to cover potential shortfalls.

Credit history and repayment behaviour

Another key factor underwriters notice first is the borrower’s credit history and how they have managed previous financial commitments.

Credit reports provide insight into past borrowing behaviour, including missed payments, defaults or county court judgments. A strong history of timely repayments can indicate reliability, while recent adverse events may raise concerns. Lenders often look for patterns rather than isolated incidents.

The level of existing debt is also important. High credit utilisation or multiple active accounts may affect how lenders view affordability. Even if payments are up to date, a high level of indebtedness could indicate increased financial pressure.

For landlords, credit history remains relevant even when applying for a buy-to-let mortgage. While rental income is a primary consideration, lenders may still assess the borrower’s overall financial profile, particularly for portfolio landlords with multiple properties.

Affordability and expenditure analysis

Affordability is central to what underwriters notice first, as it determines whether a borrower can realistically maintain mortgage repayments.

Lenders review both income and expenditure to calculate disposable income. This includes regular outgoings such as utilities, childcare, travel and existing credit commitments. Many lenders use detailed affordability models to assess how repayments would fit within a borrower’s budget.

Stress testing is also applied to ensure borrowers could afford repayments if interest rates rise. This is particularly relevant in a fluctuating rate environment. The stress rate used may vary between lenders and mortgage products.

For buy-to-let mortgages, affordability is often assessed using rental yield rather than personal income. Lenders typically require rental income to exceed a certain percentage of the mortgage interest payments, which is known as interest coverage ratio (ICR).

The property and its suitability

Underwriters also consider the property itself early in the assessment process, as it acts as security for the loan.

Lenders will evaluate the property’s value, condition and marketability. A valuation is usually carried out to confirm that the property is worth the agreed purchase price. Issues such as structural concerns or non-standard construction may affect lending decisions.

For buy-to-let properties, location and rental demand can be particularly important. Lenders may consider whether the property is likely to generate consistent rental income and whether it meets specific criteria, such as suitability for tenants.

Specialist property types, including HMOs (houses in multiple occupation), may be subject to stricter underwriting criteria. These properties often require additional checks relating to licensing, rental income projections and management arrangements.

Deposit size and loan-to-value ratio

The size of the deposit is another factor underwriters notice first, as it directly affects the loan-to-value (LTV) ratio.

A larger deposit generally reduces the lender’s risk, which may improve the chances of approval. Lower LTV ratios can also provide access to a wider range of mortgage products and potentially more favourable interest rates.

Lenders will also verify the source of the deposit. This may include savings, gifts from family or proceeds from the sale of another property. Documentation is usually required to confirm that the funds are legitimate and not borrowed.

In buy-to-let scenarios, deposit requirements are often higher than for residential mortgages. Many lenders require at least 20–25%, although this can vary depending on the borrower’s profile and the property type.

Documentation and consistency checks

Underwriters carefully review submitted documents to ensure all information is accurate and consistent.

This includes cross-checking details across payslips, bank statements and application forms. Discrepancies, such as unexplained transactions or mismatched figures, may lead to further questions or delays in the process.

Bank statements are often examined to understand spending habits and identify any potential risks. Regular gambling transactions, large unexplained transfers or signs of financial strain may be flagged for further review.

Providing clear and complete documentation can help streamline the underwriting process. Missing or inconsistent information may require additional clarification, which can extend the time it takes for a decision to be made.

A practical borrower scenario

To illustrate what underwriters notice first, consider a borrower applying for a buy-to-let mortgage on a £250,000 property.

The borrower provides a 25% deposit and expects to receive £1,100 per month in rental income. The lender assesses whether this meets their required interest coverage ratio, which might be set at 125% or higher depending on the borrower’s tax position and the product.

The underwriter then reviews the borrower’s credit history, which shows a missed credit card payment 18 months ago but otherwise strong repayment behaviour. This may be considered a minor issue, particularly if there have been no recent problems.

Finally, the lender examines bank statements and income to ensure the borrower could manage payments during void periods. If the overall profile meets the lender’s criteria, the application may proceed, although outcomes can vary depending on individual circumstances and lender policies.

Why lender criteria can vary

Although there are common themes in what underwriters notice first, each lender applies its own criteria and risk assessment approach.

Some lenders may place greater emphasis on credit history, while others focus more on income stability or property type. Specialist lenders may also cater to borrowers with complex circumstances, such as self-employment or multiple income streams.

Buy-to-let lending can vary significantly, particularly for portfolio landlords or those investing in HMOs. Additional checks may be required, including portfolio assessments and detailed rental income analysis.

Because of these differences, outcomes may vary between lenders even when reviewing the same application. A regulated mortgage adviser may be able to provide personalised advice based on individual circumstances and current lender criteria.

Frequently asked questions

What do mortgage underwriters check first?

Underwriters usually begin by reviewing income, employment and credit history to assess financial stability and repayment reliability.

Do underwriters look at bank statements in detail?

Yes, bank statements are typically reviewed to verify income, assess spending habits and identify any financial risks or inconsistencies.

Is credit score the most important factor?

Credit score is important, but lenders consider multiple factors including income, affordability, deposit size and the property itself.

How do underwriters assess buy-to-let mortgages?

For buy-to-let applications, underwriters often focus on rental income, interest coverage ratios and the property’s suitability for tenants.

Can a mortgage be declined after underwriting?

Yes, if the application does not meet lender criteria or if concerns arise during checks, a lender may decline the application.

This guide provides general information only. Personalised mortgage advice should always come from a regulated mortgage adviser authorised by the Financial Conduct Authority.