Declined Mortgages

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Declined Mortgages
Declined Mortgages

Declined Mortgages – when your application is rejected

Having your mortgage application declined can seem a major obstacle to your home-buying plans. But don’t panic – there is still a good chance you can get a loan.

Generally, a decline means that you don’t meet all the mortgage lending criteria – but every Mortgage Provider sets different rules. By researching the details, we could find you an alternative mortgage that works for you.

Common reasons for mortgage rejection

Lenders’ application processes focus on finding out about you as a customer. They want to assess how easy you will find it to repay the loan. 

Some of the most common reasons for a refusal include:

  • Not being registered to vote – this is important proof of your identity and address
  • Late or missing payments on a loan, credit card or other finance in the past year
  • Mistakes on your application form – e.g. an incorrect address 
  • Poor credit history: a default or a County Court Judgement (CCJ) 
  • Making many credit applications in a short time-frame. 
  • Ever taking out a payday loan 
  • Repayments are too high for your monthly income/outgoings
  • You don’t have a consistent income 
  • Recently changing jobs
  • Your purchase property is of non-standard construction

Declined after an Agreement in Principle 

An Agreement In Principle (or Decision in Principle) is confirmation from a lender of how much you could potentially borrow. But it’s not a mortgage guarantee. 

Some mortgages are declined after an Agreement because the lender looks more closely into your details and discovers something new. Or, perhaps something has changed since they gave you the Agreement. 

Will a decline affect my credit score?

A mortgage decline won’t necessarily harm your credit score. Your credit report will state that you applied for a mortgage, but won’t give the outcome of the application. 

Applying for more mortgages, however, could be a bad idea. Each one comes up on your credit history and making several applications in a short time can damage your credit score. It can appear to lenders that you are urgently seeking to borrow money.

What should I do after a decline?

The first step is to ask why the lender rejected your application. The reason could be something simple that you can quickly rectify. 

Not all lenders will share their reasons, though. The next step is to check your credit report online to see if this is where the problem lies. Occasionally there is an error – in which case you can ask the relevant financial provider to update their records.

If you think the lender rejected you due to bad credit, you may find alternative mortgage options with specialist mortgage lenders. Bad credit mortgages are fairly common and accept people with defaults, CCJs or debt management plans, depending on the details. These mortgages often have higher interest rates, though. 

It can also help to put down a bigger deposit. If you can reach 15% of the property value you will improve your chances of approval. You could also consider a joint mortgage with a partner or family member. 

Generally, speaking to a Mortgage Broker is a great way of understanding your options. We’ll explore whether an alternative lender can help you buy a home.

How can a Mortgage Broker Help? 

It’s rare for anyone with a Mortgage Broker working for them to have their mortgage application declined. We check the lenders’ criteria carefully before recommending any deal, to make sure you match their requirements. 

We get to know you and your situation and look out for anything that could cause any issues for a lender. Then we compare dozens of options to get the most suitable mortgage offers.  Our team of advisers are here to support you at every step, from setting your property budget to completing your purchase. 

Mortgage Broker Services is a trading name of Thomas Oliver UK LLP which is an appointed representative of The Openwork Partnership, a trading style of Openwork Ltd which is authorised and regulated by the Financial Conduct Authority. We are registered in England and Wales. Contact our registered office for an initial chat about how we can help you find a good mortgage deal.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.