Why mortgage applications are declined and what to do next

Money Advice Service

If your mortgage application gets declined, there are a number of things you can do to improve your chances of getting approved next time. Don’t rush off to another lender as each application could show up on your credit file. This guide will help you understand why your application might have been refused and what you can do to increase your chances next time.

Common reasons for a declined mortgage 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.

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.uk 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 at least 12 months before you want a mortgage.

Too much debt

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

If you’ve got money worries, there is plenty of free and confidential advice out there to help you.

Payday loans

Any payday loan you’ve had over the last 6 years will be listed on your file, even if you’ve paid it off on time. It could still count against you as lenders might think you won’t be able to cope with the financial responsibility of having a mortgage. The impact of having a payday loan will differ from lender to lender and this won’t necessarily mean you will be turned down for a mortgage.

Administration errors

Lenders aren’t perfect. Many of them put the details from your application into a computer so you might have failed because of a mistake or error on your credit file. A lender is unlikely to give you a specific reason why you have failed with a credit application other than it relates to your credit file. If this occurs then the lender should provide you with the details of the credit reference agency they used.

Not earning enough

Use our Mortgage affordability calculator to see what you can afford to borrow.

You can ask for a smaller mortgage, or see if you qualify for shared ownership or help with one of the government home buying schemes.

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 is likely to have a better idea of the type of borrower lenders will want to attract.

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 might have your mortgage declined

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 the decision 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 if mortgage application is declined?

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.

Your next step

This article is provided by the Money Advice Service.

Some important information about Rest Less Money

We want you to understand the positives, but also the limitations of using our site. We operate in a journalistic manner and therefore all information, guidance or suggestions provided are intended to be general in nature, and you should not rely on any of the information on the site in connection with the making of any financial decision.

When we set out to build Rest Less Money, we wanted to be a trusted place where you could find helpful information about financial matters affecting the over 50s. As a free to use resource, we try hard to provide the best information we can, but we cannot guarantee that we won’t occasionally make mistakes. So please note that you use the information on our site at your own risk, and we can’t accept liability if things go wrong.

Key things to remember when using Rest Less Money:

We do not offer financial advice – As a journalistic site, it’s important to know that we do not provide financial advice. You should always do your own research before choosing any financial product so that you can be certain it is right for you and your specific circumstances. If you are in any doubt, please seek professional financial advice from a regulated financial advisor.

No Liability – please note that you use the information on Rest Less Money at your own risk and we can’t accept liability for how you choose to use the information given on our site. We will often provide links to content or products and services available on other third-party websites. These are provided purely for your convenience and we cannot be held responsible for any content, or any of the products and services offered on any website that we link to.

 

Accuracy of Information – We try to make sure that all the information provided on Rest Less Money is correct at the time of publishing as we want it to be the most helpful resource possible. Sadly, we are not perfect however, and so we can make no guarantees as to the completeness, accuracy, adequacy or suitability of the information available on the site.
Whilst we work hard to try and provide accurate information, deals and prices can change, so whilst they may be correct at the time of writing, providers may subsequently decide to alter them later – so always double check first.

A final note on the Rest Less Community Forums – always remember that anyone can post their opinion on the Rest Less Community Forums, so it can be very different from our own opinion and may not be factual or well researched. Always be wary of any content posted on the forums and be sure to do your own research and due diligence on anything suggested. 

We hope you find Rest Less Money a useful resource and we would welcome your feedback at [email protected] on how to make it even better. For more information on any of the above you can read our full terms and conditions.

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on email

Get the latest ideas, advice and inspiration​

No spam. Just useful and interesting stuff, straight to your inbox. Covering finance, learning, jobs, volunteering, lifestyle and more.

By providing us your email address you agree to receive emails and communications from us and acknowledge that your personal data will be used in accordance with our Privacy Policy and Terms and Conditions. You can unsubscribe at any time by following the link in our emails.

Join Rest Less for free

Rest Less is the UK’s fastest growing site for the over 50s, focusing on finance, learning, careers, volunteering, lifestyle and more. 

Good luck with your application

Before you go, we’d love to stay in touch to find out how you get on. Sign up to Rest Less today to get the latest volunteering, careers, learning, financial planning and lifestyle resources sent straight to your inbox.

By providing your email you agree to receive emails and communications from us and acknowledge that your personal data will be used in accordance with our Privacy Policy and Terms and Conditions. You can unsubscribe at any time through the link in our emails.

Good luck with your application

Before you go, we’d love to stay in touch to find out how you get on. Sign up to Rest Less today to get the latest jobs, learning, volunteering, financial planning and lifestyle resources sent straight to your inbox.

By providing your email you agree to receive emails and communications from us and acknowledge that your personal data will be used in accordance with our Privacy Policy and Terms and Conditions. You can unsubscribe at any time through the link in our emails.