last updated September 23rd, 2025
Your mortgage broker checks your applications as well as an underwriter who ensures that applications are honest and meet the mortgage lenders criteria. Applying for a mortgage is rarely straightforward and lenders are trained to spot warning signs in an application that might suggest higher risk. These 'red flags' can lead to delays, extra checks or in some cases, refusal. Understanding them in advance can help you prepare stronger documentation and avoid unnecessary pitfalls. Below are some of the most common red flags in mortgage underwriting and what they mean for prospective borrowers.
Affordability checks use your documents to model income after tax, essential commitments and a stress-tested mortgage payment at a higher interest rate. This is why consistency matters: the payslip should match the bank credit; the childcare outgoings on your application should match your statements. When things don’t line up underwriters ask for clarifications - not because they’re suspicious but because regulation requires it.
Lenders are cautious about sudden unusual movements of money. A large deposit without a clear, documented source such as a payslip, sale of an asset or an official gift letter may trigger suspicion. Always be ready to explain and evidence where the money came from and have proof.
If your payslips, P60s or tax returns don’t match what you’ve declared an underwriter will notice. Even small discrepancies can be flagged so ensure your figures are accurate and consistent across every document you submit. Self employed will have different earnings history to an employed person - earnings consistency over a period is what is expected.
Periods without work or jobs that can’t be verified are red flags. Lenders want to be sure of stable ongoing employment and income. If you’ve had gaps, prepare to explain them and provide evidence of how you managed financially during that time.
If your monthly debt repayments take up a large proportion of your income, lenders may worry about affordability. This ratio is a crucial measure of financial stability so reducing existing debts before applying can improve your chances.
Late payments, unresolved disputes or high credit card balances will raise concerns. Lenders cross-check your credit file against your application so review your report in advance and correct any errors.
Trying to hide financial commitments such as personal loans, car finance or maintenance payments is risky. Lenders usually find out and failing to disclose these upfront could be treated as dishonesty.
Cash gifts, overseas transfers or informal loans from friends must all be documented properly. Anti-money laundering rules require lenders to know where every penny comes from. Provide gift letters or bank statements as proof of legitimacy.
Applying for several forms of credit in a short time suggests financial stress or that your are spending beyond your means. Too many recent credit checks on your file can reduce your credit score and prompt underwriters to question your financial stability.
Simple mistakes such as different addresses, misspelt names or missing details can create doubts. Double-check everything on your form before submission and make sure all documents match exactly.
A history of bankruptcy, repossession or missed mortgage payments is a major red flag. While it doesn’t make approval impossible, you’ll need to provide strong evidence of financial recovery and demonstrate long-term stability.
In short, avoiding red flags is about being transparent, accurate and well-prepared. The more organised your financial records are, the less likely you are to face delays or rejection during the mortgage process.
After checking all of these read Mortgage documentation checklist on how to make a successful mortgage application.
