Having a mortgage application declined is stressful, but it does not mean you cannot get a mortgage at all. There are many reasons applications are turned down, and in most cases, there are steps you can take to improve your chances next time.
Common Reasons for Mortgage Decline
Credit issues Your credit history plays a significant role in a lender's decision. Common credit-related reasons for decline include:
- Missed payments, defaults, or County Court Judgements (CCJs)
- A thin credit file (little or no borrowing history)
- Too many recent credit applications
- Being on an IVA or having a previous bankruptcy
If credit is the issue, our guide to improving your credit score covers practical steps you can take. You may also want to explore bad credit mortgage options.
Affordability Lenders stress-test your ability to afford repayments, not just at the current rate but at higher rates too. You may be declined if:
- Your income is not high enough relative to the amount you want to borrow
- You have significant existing debts (credit cards, car finance, loans)
- Your regular outgoings are too high
- Your employment type or income structure does not meet that lender's criteria
Property issues Sometimes the decline relates to the property rather than you:
- The property is valued lower than the purchase price
- The property type is non-standard (e.g. concrete construction, flat above commercial premises)
- The property is in poor condition or has structural issues
Documentation or application errors
- Incomplete or inconsistent information on the application
- Discrepancies between declared income and evidence provided
- Missing documents
What to Do After a Decline
Do not panic or immediately apply elsewhere. Each mortgage application leaves a footprint on your credit file. Multiple applications in a short period can make things worse.
Find out why. Ask the lender for the reason. They are required to tell you if the decision was based on credit reference agency data. Understanding the specific reason helps you address it.
Review your credit report. Check your report with all three agencies (Experian, Equifax, TransUnion) for errors or issues you were not aware of. Incorrect information can sometimes be corrected.
Speak to a mortgage broker. Different lenders have different criteria. A broker who understands the full range of lenders can often identify an alternative lender whose criteria better match your circumstances. What one lender declines, another may accept.
Address the underlying issue. Depending on the reason:
- Credit issues: work on improving your score before reapplying
- Affordability: reduce debts, increase your deposit, or consider a lower purchase price
- Property issues: consider a different property
- Documentation: ensure everything is complete and accurate
How Long Should You Wait Before Reapplying?
This depends on the reason for decline:
- Documentation errors: You can reapply relatively quickly once corrected
- Affordability: Address the issue first (pay down debts, increase deposit)
- Credit issues: Give yourself time to improve your score, typically three to six months of good credit management
- Property issues: You can apply for a different property immediately
Can a Broker Help After a Decline?
Yes. One of the key advantages of using a mortgage broker is access to a wide panel of lenders, each with different criteria. A lender who declines your application may have stricter rules than others in specific areas. A broker can assess your situation, understand why you were declined, and identify lenders more likely to approve your application.
At CGR Financial, we regularly help clients who have been declined elsewhere. Contact us to discuss your situation.
Your home may be repossessed if you do not keep up repayments on your mortgage.
The information contained within was correct at the time of publication but is subject to change.