What to do if You've Been Declined for a Mortgage

If you’ve been declined a mortgage for a property you’re trying to buy, don’t panic, you’re not alone. Rejections are relatively common, but your next steps are absolutely crucial. 

Here we cover the reasons why your mortgage application might get denied, what to do if you’ve been rejected, and where to get support to prevent any further unnecessary refusals.

Common reasons mortgages are declined

There’s no one-size-fits-all reason why any particular mortgage application gets denied, but here are some of the most common instances of mortgage refusal: 

Affordability

When assessing your finances, a lender might conclude that you couldn’t comfortably afford the mortgage payments. This could be due to your income, outgoings, or failing a stress test to cope with future interest rate rises. 

Credit issues

If you have adverse credit (perhaps due to late payments, CCJs, or another reason), some lenders will view you as high-risk, potentially leading to a mortgage being declined. Lenders might also be hesitant if you have a low credit score or a recent credit history showing multiple borrowing applications. However, there are lenders comfortable with complex or bad credit.

Existing debt

If you’ve got a high debt-to-income ratio due to outstanding loans or credit card debt, this can lead to a mortgage rejection. Lenders might also decline a mortgage if your statements show erratic spending patterns or regular gambling habits. 

Employment history

Typically, most lenders prefer stable, long-term careers. If you’re self-employed or a freelancer, some lenders won’t be willing to offer a mortgage or will have stricter eligibility criteria. Also, inconsistent income can be an issue for lenders. For example, if part of your income comes from commission, overtime or bonuses - some lenders won’t include it.

Deposit source

Lenders should be clear about any minimum deposit requirements, so this shouldn’t be a reason for a declined mortgage unless you’ve ignored this. However, some lenders may reject a mortgage application if they’re uncomfortable with your deposit source (for example - gifted deposits, using a personal loan, or profits from cryptocurrency).

Property issues

It’s fairly common for a mortgage to be declined due to issues arising from a valuation survey. For example, if the official valuation from the lender’s surveyor is below your offer price, the lender may not be willing to let you borrow the amount you need - this is known as a down valuation. 

Other reasons

It’s important to understand that sometimes mortgages can be declined due to something simple like failure to register on the electoral roll or even refusal with no reasons given. 

So it’s well worth getting advice from an independent broker who can evaluate the details. They’ll find out what went wrong and discover the specific reason your mortgage application was rejected.

What to do if you’ve been rejected for a mortgage

Here are some straightforward steps to follow if your mortgage application has been declined:

Speak to an expert and find out why: Your lender may not provide any reasons for the rejection. Getting support from an experienced mortgage advisor means they can review all your details and discover the obstacles or problems that led to your mortgage refusal. It could be something as simple as human error or a mistake on your credit file.

Fix the issues: It may be the case that your broker spots what went wrong and they can advise you on the steps to rectify things. If the reason for the refusal was credit-related, it can take a few months for your credit reports to reflect any improvements. 

Speak with the right lender: There might be no underlying problems with your application and it could simply be that you didn’t approach the right lender for your circumstances. After reviewing all your details and property purchase plans, your mortgage advisor will be able to introduce you to the right lender to deal with. 

If you want to have a free, no obligation chat with one of our skilled brokers, get started below:

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How soon can you re-apply?

If you’re wondering how long to wait after your mortgage was declined to apply again, the truth is, you can re-apply straight away if you want to. As a ballpark figure, waiting around 3 months can be helpful to let any issues partly wash from your credit file. However, reapplying quickly is often not advisable. 

If you don’t know why you’ve been rejected, or haven’t taken the steps to rectify any issues, you’ll likely end up with another mortgage refusal - which can compound your problems. You can overcome one declined mortgage, but if you continue to apply for loans, you’ll have multiple hard searches on your credit file, and this can make borrowing extremely difficult. 

So, before you make any more applications, take the time to find out what went wrong to avoid another rejection. The best way to do this is with the guidance of an expert mortgage broker. They know exactly what each lender is (and isn’t) looking for in an applicant. They’ll assess your situation and introduce you to the right lender to help avoid further unnecessary marks on your credit file. 

Stages when a mortgage can be declined

Here are some examples of stages in the house-buying process where you might get rejected and what your next options are:

Can a mortgage offer be withdrawn?

Yes, an offer can be withdrawn by a lender for several reasons. It depends on what stage you’re at in the home-buying process, but the most common reasons for withdrawal of a mortgage offer are usually related to:

• The property: A lender might withdraw its mortgage offer if issues arise after a survey or valuation (perhaps due to concerns around the home’s value, the construction, or ground rent and service charge contracts).  
• Changes to your finances: If you lose your job, are made redundant, take on lots of new debt, or your income drastically drops - the lender might reconsider your mortgage offer
• Inaccurate information: If you’ve not provided accurate details about your finances (like inflating your income or hiding debt) the lender can decide to withdraw a mortgage offer.

Reasons specific lenders decline mortgages

Although the reason for your rejection can be unique, there are some common reasons why certain high street lenders and banks tend to decline mortgage applications. 

Here are a few of the main reasons for refusal with major UK lenders:

• Nationwide: The eligibility criteria can be fairly strict and Nationwide often declines mortgages if people have bad credit or are self-employed with less than 2 years’ accounts. Nationwide also tends to be rigid around address history (at least 36 months) and income sources, usually unwilling to include commission or bonuses.
• Halifax: Another lender that tends to be strict with credit history and adverse credit. Halifax may offer an agreement in principle (AIP) but then decline your full mortgage application if it spots something it’s uncomfortable with during the hard credit check at the underwriting stage. 
• NatWest: NatWest will likely decline your mortgage if you’ve got severe credit issues like CCJs (less than 2 years old) or recent DMPs or defaults. So you might find that NatWest declines your mortgage after an AIP or at the underwriting stage if financial issues surface. It’s also possible for a NatWest mortgage to be declined after a valuation if it highlights problems with the construction or property price.

Whether you approach one of these lenders, or other popular options like Aldermore, Yorkshire Building Society, HSBC, or whoever - it’s important to realise there might be single or multiple reasons why your mortgage is declined. 

Without support from an expert advisor, it’s basically a guessing game because lenders often aren’t forthcoming with details for mortgage declines - even if you’ve received an AIP or are further along in the application process.

How we can help if your mortgage has been declined

Getting declined at any stage of the mortgage application process can feel pretty devastating, but it doesn't have to be the end of your home-buying journey. One of our expert brokers can evaluate where things went wrong and put you back on the right path to make your house purchase a reality. 

They’ll advise you on improving your credit, presenting your finances more attractively, dealing with any property-related obstacles, or finding a more suitable lender. You can be confident that our advisors will be focused on finding the solution you need. 

Here are some more of the reasons people choose our brokers if their mortgage has been declined:

• Our brokers specialise in mortgage rejections at every stage
• Your first chat is free with no obligation to proceed
• We are 5-star rated on leading review sites
• To prevent any further mortgage refusals

Ready to take advantage of a free, no-obligation chat with an expert broker who specialises in declined mortgages? Get started here.