Your home may be repossessed if you do not keep up repayments on your mortgage.
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Being turned down for a mortgage is disappointing, especially if you’ve found the home you want. But a decline from one lender doesn’t mean nobody would lend to you. Lenders all have different rules, and what one rejects another may accept. The key is to understand why it happened before you try again.
Don’t rush into another application
The natural reaction is to apply somewhere else straight away. That could make things worse. Each full application usually leaves a hard search on your credit file, and several in a short space of time may make other lenders more cautious.
Take a step back, find out what went wrong, then choose the next lender carefully.
Common reasons mortgages are declined
Credit history. Missed payments, defaults, county court judgments or a high use of credit cards could all count against you. Sometimes the problem is simply an error on your file. Our guide on what credit score you need for a mortgage explains more.
Affordability. The lender may have decided the loan is too high for your income once your outgoings, debts and dependants are taken into account.
Your income type. Some lenders aren’t comfortable with self-employed income, contract work, bonuses or a new job. That doesn’t mean others won’t be.
Bank statements. Lenders look closely at your spending. Gambling transactions, regular overdraft use or payments to lenders you haven’t declared could raise questions. We’ve covered this in common bank statement mistakes that could delay your mortgage.
The property. Sometimes the issue is the home rather than you. Non-standard construction, short leases, flats above shops or a down valuation could all cause a decline. Our guides to non-standard construction and mortgage valuations vs surveys explain more.
Mistakes on the application. Incorrect details, missing information or figures that don’t match your documents may lead to a decline.
What to do next
- Ask the lender for the reason. They may not give full detail, but they’ll often tell you whether it was your credit score, affordability or the property.
- Check your credit file. Look at all the main credit reference agencies, as lenders don’t all use the same one. Correct any errors and make sure you’re registered on the electoral roll. You can check your credit score through our site.
- Tidy up your finances. Paying down card balances, avoiding new credit and keeping your bank account in good order for a few months could all help.
- Get advice before applying again. A broker could match you to lenders whose criteria suit your situation, rather than trying lenders one at a time.
Specialist lenders
If your credit history has taken a knock, there are lenders who specialise in less straightforward cases. Rates may be higher, but it could be a route to owning or keeping your home, with the option to remortgage to a better deal later. Our guide to bad credit mortgages in Birmingham covers this in more detail.
Agreement in principle first
An agreement in principle gives you an idea of whether a lender may lend and how much, often using a soft search that doesn’t affect your credit file. It isn’t a guarantee, but it could reduce the risk of another decline.
How we could help
One of the most useful things a broker does is know where to place a case before it’s submitted. We have access to a wide range of products from High Street Lenders and specialist products not available direct. We’ll look at why you were declined, check what could be improved and find lenders more likely to accept you. You can read more in mortgage broker vs going direct to a lender.
Get in touch and we’ll help you work out the next step.
Frequently asked questions
The decline itself isn’t recorded, but the hard search from the application usually is. Several searches in a short period could affect how other lenders see you.
It depends on the reason. If it was an error that’s now fixed, you may not need to wait long. If it was credit history, a few months of improvement could help.
We can’t promise an outcome, but we could look at lenders with different criteria and present your case in the way most likely to succeed.
