Find out what mortgage underwriting actually is and how it affects your chances of approval.
When approaching your mortgage application, it can help to have a full understanding of the mortgage underwriting process. Let’s look at how the process unfolds, any potential problems that could arise, and how you can avoid them.
What is mortgage underwriting?
Mortgage underwriting is the part of your mortgage application where the lender decides to approve or decline you. They’ll assess the risk in lending to you and whether or not it’s a level they’re happy with. They’ll do this by carrying out a range of eligibility checks against their own lending criteria and wider legal regulations.
What does mortgage underwriting involve?
Many mortgage underwriting processes are done automatically via an algorithm. If your case is a little more complicated and requires human judgement, it’ll be referred for manual underwriting.
If your case is referred – don’t panic. It’s not necessarily bad news, it just means it’s more complex than what the algorithm has been designed to handle. A human might look more favourably on your application than a computer would, anyway.
From there, the underwriter will be looking at the following:
High-level checks: Ensuring you meet the lender’s general criteria like age, employment status, minimum income requirement, and legal residency.
Credit checks: The lender will use a major agency like Experian, Equifax or Transunion to review your credit history and determine whether they think you would have issues repaying your mortgage.
Affordability checks: The lender carries out their income multiple calculation to decide on the maximum amount you can borrow. It’s usually between 4 and 5.5 times your annual income.
Property checks: The lender now shift their attention from you to the property instead. They’ll look at whether or not it’s property is deemed high risk (like a flat above a shop or a non-standard construction property) and therefore harder to sell in the future.
Fraud and money laundering checks: The lender will check all your details are correct and that the deposit money you’re using has come from a legitimate source.
How long does mortgage underwriting take?
If it’s automatic, it can happen quite quickly. But if it’s manual, it could take anywhere from a few hours to a few days. This will depend on the complexity of your case, how experienced the underwriter is, and whether or not they’ve had to request additional information.
What should I do if my mortgage application is declined during underwriting?
Firstly, let's look at why you could be declined. The most common reasons are:
Affordability – either you don’t earn enough to qualify for the loan you applied for, you’ve had a change in job or income that has altered your affordability, or the lender won’t consider your income source.
Deposit – you don’t have enough deposit money saved up, or the lender won’t consider the source.
Bad credit – you have a history of bad borrowing, you’ve made too many credit applications in a short period of time, or the lender is concerned by a specific incident in your credit history.
Bank account conduct – the lender can’t see proof that you’re responsible with your money and therefore doesn’t think you’ll budget correctly to pay for your mortgage payments and associated costs.
Most of the time, the lender will justify their reason for rejecting your application. If they don’t, make sure you ask them so you know what not to do next time – or ask your mortgage broker to do it on your behalf.
The impact of the decline can cause you issues down the line so it's important to fix the underlying issue that caused the decline in the first place. For example, if you are declined based on your debt to income ratio or general bad credit, it's important to fix these issues before reapplying.
Remember that if your mortgage application is declined, it’ll affect your credit report. So it’s best to wait a few months before applying again.
If you’re worried about your mortgage application being rejected because you’re buying a non-standard construction property or you have a low deposit or bad credit, reach out to our team – we can help you find a lender who will consider your unique circumstances.
What happens after underwriting?
If your application was approved, firstly, give yourself a pat on the back – you’re one step closer to buying your dream home! Now it’s over to your solicitor who will contact the seller’s solicitor to finalise contracts and set a completion date.
If your application is rejected, speak to your broker and decide whether it’s possible to renegotiate with the lender or consider a new application.
When the underwriter is your friend
It is easy to see the underwriter as an obstacle you must get past, rather like the boss fight at the end of the level of a computer game, but quite often the underwriter is your friend and not a foe.Your underwriter will take note of any patterns of determined improved credit with anyone trying to build up their financial dealings after a period of bad credit, and will make an assessment based on experience that might pass your application with a poor credit score that a computer would simply reject.
In some instances, the underwriter will request more information, giving you the chance to explain any poor history and increase your chances of an application being approved.
Mortgage underwriting FAQs
We’ve provided the answers to some of the most common queries we receive surrounding mortgage underwriting, but if you’ve got a question you want answered, feel free to submit an inquiry.Is there anything I can do to speed up the underwriting process?
Once you’ve submitted your application, there’s not much you can do but wait patiently for a decision. Most underwriters complete their assessment within a week, but often you’ll hear from them sooner.Keep refreshing your email inbox, and if your lender has requested additional documentation to support your application you can speed up the process by providing them with the requested information as soon as possible.
What should I do if an underwriter rejects my mortgage application?
While it can be a blow to receive a mortgage rejection, it’s not the be-all and end-all.When you submit an application, it is assessed against criteria specific to your chosen lender. So just because your application was rejected by one, this doesn’t mean that this will be the case with another.
Sometimes, a rejection at this time can be a blessing - it’s a lot better finding out earlier, rather than later, that your chosen mortgage is unaffordable or unsuitable for your circumstances.
What happens if my circumstances change after an underwriter has approved my application?
Once the mortgage underwriter has given your application the seal of approval, you're pretty much home and dry; a mortgage offer is almost certainly on the way.That being said, if your circumstances change in the time between you receiving the offer and the sale completes, the lender reserves the right to decline your request for funds.
It’s strongly advised that you report any significant changes to your circumstances to your lender, because if they get wind of it you could be looking at hold-ups or rejections - even if your ability to repay isn’t affected.
Do all UK mortgages go through a human underwriter?
The short answer is: Not always, but most complex applications do.
Modern UK mortgage lending relies on sophisticated software known as Automated Underwriting Systems (AUS) or Decision in Principle (DIP) engines. These systems use complex algorithms to instantly assess low-risk applications, speeding up the process significantly.
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Do All UK Mortgages Go Through a Human Underwriter?
All applications go through the underwriting process, but they don’t all necessarily go to an underwriter. They don’t need to. Many can be accepted or declined automatically based on how well they fit the lending criteria. But if your application contains something more complex to consider – like a complicated credit history or a non-standard property – it’ll be referred to manual underwriting, so an expert can decide.
Modern UK mortgage lending relies on sophisticated software known as Automated Underwriting Systems (AUS) or Decision in Principle (DIP) engines. These systems use complex algorithms to instantly assess low-risk applications, speeding up the process significantly.
When Technology Takes the Lead (Automated Underwriting)
If your application presents a low risk, the AUS can often approve the mortgage without a human underwriter's intervention. This typically happens when you meet all the following criteria:
High Credit Score: A near-perfect credit history with no adverse events.
Simple Income: Full-time, standard PAYE employment with a consistent salary.
Low Loan-to-Value (LTV): A large deposit, such as 25% or more.
Standard Property: A typical freehold or leasehold property of standard construction.
When a Human is Required (Manual Underwriting)
Any application that falls outside a lender's standard, low-risk parameters will be 'referred' to a human underwriter. This manual review ensures a specialist can evaluate the risk and apply discretion.
Common examples that require a human underwriter include:
Complex Income: Being self-employed, a contractor, or having irregular income (commission or bonuses).
Adverse Credit: Any history of defaults, CCJs, or recent credit searches.
Non-Standard Property: Properties made of unusual materials or those requiring specialist knowledge.
Specialist Mortgages: Applications involving Gifted Deposits, Joint Borrower Sole Proprietor (JBSP), or large loans.
In summary: While technology speeds up simple cases, if your financial situation has any complexity, a human underwriter will be the one making the final decision.
Seek specialist advice to prevent problems with mortgage underwriting
Ultimately, the underwriting process is in place to ensure that your requested mortgage and repayment plan is affordable, and well suited to your specific circumstances as a buyer.
What’s the best way of ensuring that this happens? By working with a broker. Our advisors have access to over 100 UK banks and independent lenders, and paired with realms of industry expertise, know exactly which lenders to approach and what products to suggest for someone in your position.
Give us a call on 02380 980304 or tell us a bit about yourself using our online contact form, and a member of the team will be in touch.
