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.

Poor credit history

If you’ve had issues making payments in the last six years, this will be on your credit report. Lenders will check for missed credit card or loan repayments to see whether you’ll be able to keep up with your mortgage payments.

Too many hard credit checks can also affect your credit score. It’s not a good idea to apply for a mortgage with lots of different lenders in a short space of time.

Not registered to vote

Lenders need to check you are who you say you are. Being registered to vote at your current address is an easy way to do this.

Small deposit

A small deposit can be an obstacle to getting a mortgage. Try to aim for at least 15% of the property value for your best bet of being accepted. Learn more about deposits.

Too much debt

Too much debt suggests to lenders that you’re not ready to take on more. Try to pay off as much of your debt as you can before applying for a mortgage.

 

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.

Affordability

You might not be earning enough to afford the size or type of mortgage you’re applying for. Shared ownership could be an option, or think about setting your sights a little lower.

Employment history

Lenders will want to see that you can repay your mortgage through steady income and consistent employment. If there have been times where you haven’t been employed or you’ve recently changed jobs, this might impact your application. 

Admin errors

If any of your information has been put in wrong by mistake or because of an error on your credit report, you may not be accepted. The lender might only tell you that the reason relates to your credit report, so you might want to check your credit file.

Supplying the wrong documents

It’s important to show the right documents as proof of your income and outgoings. Make sure to check what evidence the lender can accept. If documents are missing, you might be turned down. 

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.

Things to think about if your mortgage has been declined

Check carefully whether there’s anything you might have missed in your application – or anything that would make a lender think twice.

If there’s anything on your credit report you’re unsure about, or feel is unfair, you can contact the credit reference agency to try to fix it.

Make some small changes to make sure your application and credit report are the best they can be. Pay off any debts if you can, and don’t miss a payment on things like loans, TV subscriptions or your mobile phone contract.

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. 

Try again

When you are ready.

Make some changes to solve some of the problems and you’ll soon be ready to apply again.

How to apply again

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