Why mortgage applications are declined and what to do next

If your mortgage application has been declined, it’s important to look over what you can do to improve your chances for next time. But don’t rush off to another lender as each application could show up on your credit file. Use our checklist below to see why your application might have been turned down and what you can do to increase your chances next time.

Common reasons for a declined application and what to do

Poor credit history

Check your credit file with the credit reference agencies (Experian, Equifax and CallCredit) to see what information they have about you. If any of the information on your credit report is wrong, you can correct it. Find out How to improve your credit rating.

Not registered to vote

You need to be on the electoral register at your current address so lenders can confirm who you are and where you live. It’s quick and easy to do online at aboutmyvote.co.ukopens in new window or through your local council.

Too many credit applications

When you apply for credit, the lender will search your credit report to check your suitability. Most searches are recorded, leaving a footprint on your credit history. Repeatedly applying for credit makes it look like you have problems, so try to avoid taking out new credit deals three to six months before you want a mortgage.

Too much debt

Look at our Budget planner to try and bring down your existing debt.

Payday loans

Any payday loan you’ve had since 2011 will be listed on your file, even if you’ve paid it off on time. It is still counted against you as lenders may think you won’t be able to cope with the financial responsibility of having a mortgage.

Administration errors

Lenders aren’t perfect. Many of them put the details from your application into a computer so you may have failed because of a mistake. Ask for an interview to discuss your application.

Not earning enough

You can ask for a smaller mortgage, or see if you qualify for shared ownership or one of the home buying schemes for people on lower wages. Use our Mortgage affordability calculator to see what you can afford to borrow.

Not matching the lender’s profile

Some lenders prefer to lend to a specific demographic. An independent mortgage adviser has experience of the market and a better idea of the type of borrower that lenders want. Read more on Choosing the right mortgage.

Small deposit

See our ideas on saving for a deposit. There are also several schemes available to buyers with only a 5% deposit.

Other reasons you can have difficulties

Did you know?

Three out of four borrowers are accepted for a mortgage (Source: Intermediary Mortgage Lenders Association)

If you’re self-employed or a contract worker

You have to prove you have a steady income by showing tax statements and business accounts for at least the last two to three years. You might also have to prove you have work secured for the future – but that is a decision that will vary from lender to lender.

If you’ve lived in the UK for less than three years

Most lenders are unwilling to lend to new arrivals, but not all. You’ll need to show your employment contract and a visa, which proves you have permission to live and work in the UK.

Where to go for help

A professional mortgage broker or independent financial adviser who specialises in mortgages will have regular dealings with a wide selection of lenders. They will be aware of what different lenders require before offering a mortgage, and will speak to the lender on your behalf. Read our guide on Choosing the right mortgage.

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