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What happens if your mortgage application is declined?
If your mortgage application is turned down, it can be disappointing, but it doesn’t mean you won’t ever be able to get a mortgage.
Why might your mortgage application be declined?
There are many reasons - from your credit history to issues proving a stable income. Think about your situation and try to find out the reason why before considering your next steps.
Here are some of the most common reasons for having a mortgage turned down.
Self-employed
If you’re self-employed, you may need to give the lender more information. For example, you’ll need proof of two to three years of steady income. If you don’t have enough evidence of past and current earnings, you may be turned down. Our self-employed mortgage guide has more information to help you.
Why might you be turned down after having an Agreement in Principle accepted?
The key phrase here is ‘in principle’. This means the lender told you how much they may be willing to offer you for a mortgage based on the information they had from you at the time.
Between getting your Agreement in Principle and making a full application, your income could have changed, or the information provided then doesn’t match the figures now. This may mean your application is turned down.
One or more of these reasons may be responsible:
- Changes to your monthly outgoings.
- The lender’s valuation doesn’t match what was offered in the AIP.
- Switching jobs.
- Applying for other forms of credit.
- A high loan to value (LTV) ratio.
Something in your credit history could also come up after a full credit search, such as a note of missed payments to a lender.
Can I apply again?
Yes. But before you do, think about why you've had your mortgage application declined.
There may be some things you can do to try to make sure your application goes without a hitch next time around.
Check your credit report
There are three versions of your credit history on file, held by each of the UK’s three credit reference agencies:
- Equifax
- Experian
- TransUnion
Different lenders might use different agencies to assess your credit score. Your lender will tell you which agencies they’ve used and how to contact them. Before you apply again, it might be worth going to all three to check your credit report and score, as all are assessed differently.
Learn how to check your TransUnion credit score with Halifax.
Improve your credit score
Boost your credit score and increase your chances of being accepted for a mortgage:
- Get on the electoral register – to confirm your identity and address.
- Manage accounts carefully – lenders will check your record for paying debt.
- Use a bank account – showing your savings and that you make regular payments.
- Put down roots – stability in your home and work life reassures lenders.
- Apply with caution – don’t apply for too much that affects ‘hard’ credit searches.
Rethink your borrowing
It’s worth having another look at what you can afford. Would it be better to look at something less expensive or slightly smaller and have lower monthly repayments? Or maybe you could increase your deposit and borrow less?
Don’t give up
You’ve got this! Just remember, a mortgage is a huge step for both you and the lender. The more financial stability you can show, the better your chances of being accepted.
You could lose your home if you don’t keep up your mortgage repayments
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