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Mortgage Declined

Having a mortgage application declined is an unfortunate reality for many people attempting to purchase a home. But it's important to remember that getting a mortgage declined does not mean you can't get approved for a loan in the future.

Why was your mortgage declined?

Mortgage lenders are increasingly stringent in their loan qualifications and many people, even those with good credit histories, may find themselves unable to obtain the finance they need. For many, the experience can leave them feeling frustrated and confused.

Although it can be difficult to understand why your application was rejected, there are steps you can take to improve your chances of being accepted for a loan in the future.

The most important step is to review the reasons your application was unsuccessful.

Ask for written clarification

Mortgage lenders are required by law to provide a written explanation for why they denied your mortgage application if you request it. This may include information about credit score, debt-to-income ratio, income level, or other factors that led to the rejection. Once you have this information, you can begin to address any issues that may be preventing you from getting a mortgage.

Review your Credit Report

You should also take the time to review your credit report for errors or outdated information, as this could negatively affect your chances of obtaining financing. It's advisable to speak with a loan professional who can help explain what steps you can take to improve your financial situation and increase your chances of getting approved for a mortgage in the future.

Don’t give up hope

It's important to remember that being turned down for a mortgage does not have to be the end of your homeownership dreams. With persistence and hard work, you can improve your financial situation and eventually get approved for a loan.

Seek specialist advice

Researching different lenders, shopping around for the best interest rates, and saving up a larger down payment can all help you make your dream of homeownership a reality.

Working with a bad credit mortgage broker is also a really useful way to improve your chances. They will be able to assess your situation and shop around the more specialist lenders, negotiating rates and terms on your behalf.

Why can't I get a mortgage?

There are many reasons why someone might not be able to get a mortgage, some of which are out of the individual's control.

Below are some of the most common reasons why people have their mortgage applications rejected.

Poor credit history

Most lenders will look not just at a single credit score, but at your broader history to check for missed or late payments, defaults, or CCJs. Granting someone a mortgage is always a risk for lenders and checking your credit history is one way to assess how likely it is that you will be able to make your repayments. If your financial history isn’t great, they will see you as a riskier proposition.

Insufficient income

Lenders work on annual income multiples to calculate how much they think you will be able to borrow, normally taking 4 to 4.5 times your annual salary as a cap. If you don’t meet this income requirement, your application may be turned down.

There are things you can do to address this, for example asking for a pay rise if you feel one is due or taking a second job to boost your income. Your broker can also investigate lenders who may be prepared to accept higher income multiples, or if you work in a profession such as medicine, law, or teaching, you may be eligible to borrow more.

Make sure as well that you are including all eligible sources of income. A lot of people don’t realise that things like child maintenance and many benefits can be counted as income for a mortgage application, so this could boost how much you are eligible to borrow. You could also consider asking family for help, perhaps through a guarantor or family offset mortgage.

Other outstanding debts

Alongside your income, lenders will want to allow for any other financial commitments such as credit cards, loans, car finance or hire purchase. If you have high levels of debt relative to your income, known as your debt-to-income ratio, this could lead to your mortgage application being declined.

Not enough deposit

Mortgage lenders in the UK normally look for a minimum of 10% deposit, so if you're struggling with cashflow then this could hold you back from qualifying for a mortgage. Ask your broker to investigate other options, for example, lenders who will do a 5% deposit mortgage or accept a gifted deposit from a family member.

You may also want to consider one of the government schemes available to help people with low income and small amounts of savings get on the property ladder, such as investing in a Lifetime ISA to boost the value of your savings, or shared ownership, where you buy shares of your property in chunks, paying rent on the remainder.

Mortgage refused due to credit history

If your low credit score has caused you to be denied a mortgage, it's important to understand the reasons behind this decision and work towards improving your credit score.
This may mean that you need to wait a while before you make a new mortgage application while you get yourself into a stronger position.

Review your debts

Start by making a list of all of your regular financial commitments, how much you have outstanding on each debt, and how much it’s costing you every month. This will give you a solid foundation from which to start getting your finances in order.

Prioritise payments

Take time to pay off any existing debts, making sure that all payments are made on time and in full each month. This will not only improve your credit score but also demonstrate to lenders that you are a responsible borrower. If you have multiple debts, get some advice on how to prioritise them most effectively.

Should I do a credit search?

Yes, definitely! Many people worry that checking their own records will show up on their files as a credit search, and further damage their score, but that's not actually the case. You can check your own file as many times as you like and it will have no impact at all.

It's very sensible to regularly review your own credit records, even if you’re not thinking about buying a home, as it’s a useful way to stay in control of your finances and make sure you have a good understanding of your debt and how well you are managing it.

In terms of your rejected mortgage application, checking your credit records is a helpful way to understand why you weren’t successful, and to highlight areas for improvement or correct inaccuracies. It can also give you an idea of when might be a good time to make a new mortgage application, if you can see for example that an incidence of bad credit is due to come off your record at a certain time, leaving you in a stronger position.

There are several services available for checking your own credit files, some paid for and some free of charge. It makes sense to check via a few different channels, as not all credit referencing agencies hold the same information about you.

Mortgage declined due to affordability

If you have been turned down due to affordability, it can be helpful to review your budget and expenses.

Compare a wide range of lenders

Once you have reviewed your finances, you can start to look for other lenders who may be more willing to approve your loan. It's important to compare offers from different lenders and make sure that you understand the terms of each loan before signing any paperwork.

Don't be afraid to negotiate with lenders in order to get a better deal. With the right strategies, you can increase your chances of obtaining a mortgage in the future.

Try not to overspend

Make sure that you are not overspending, as this will affect your ability to make payments on the loan.

Reduce your outgoings

Look at ways that you can increase your income or reduce your monthly costs in order to better afford the mortgage.

How to use a mortgage affordability calculator

When applying for a mortgage, it is important to take into account your income and expenses in order to properly assess whether or not you can afford the loan.

Income vs outgoings

One way to determine this is by using a mortgage affordability calculator. This tool helps you evaluate whether you have sufficient income to cover the monthly payments of the loan and other associated costs, such as closing costs or property taxes.

To use a mortgage affordability calculator, start by inputting your gross annual household income. This should include any additional sources of income that you may receive, such as bonuses, maintenance payments, or interest earned on investments. Next, include your estimated monthly expenses like car payments, student loans, groceries, insurance premiums, and utilities. Finally, enter the amount of money you are looking to borrow for the mortgage and an estimate of how much you can afford for a deposit. The calculator will then automatically generate an estimate of what size loan fits within your budget based on the information provided.

Research all loan options

Using a calculator is an essential step when researching loan options and preparing yourself for homeownership. It gives you insight into which loans fit within your financial abilities and serves as a starting point for further research. It’s also helpful to speak with lenders about their particular options and understand any additional fees or stipulations that come with each offer.

Comparing rates from different lenders will help ensure that you get the best rate available to you so that future payments are more affordable. If all of this sounds rather daunting then don’t worry, a mortgage broker can do a lot of this research on your behalf and help you find the best deals.

Mortgage declined due to valuation

In this situation, the lender doesn't believe that the home you are trying to purchase is worth what you are offering. This decision can be based on a variety of factors such as location, condition, and size of the property.

To increase your chances of getting approved in the future, you can look for other properties that may be better suited to your needs research the local property market and choose properties that are likely to retain their value.

Alternatively, you can speak with an estate agent who may be able to suggest ways in which to increase the value of the property or find a lender willing to accept your offer. It's also important to consider negotiating with the current owner to reach a mutually beneficial agreement. With the right strategies, you can find a way to get the home of your dreams.

Mortgage turned down due to exchange falling through

When a mortgage is turned down due to an exchange falling through, it means that the purchase agreement between the buyer and seller of the property has been cancelled or withdrawn, which can result in the lender not approving a loan. This type of situation is often caused by one party not meeting their obligations such as failing to provide necessary paperwork, incorrect or incomplete information, or withdrawing from the sale.

Do your research

In order to prevent this issue from happening again, it's important to properly research prospective properties and ensure that all conditions of sale have been met before making an offer. Additionally, legal advice should be sought if there are any issues regarding the transfer of title after the purchase has been made.

Minimise the risks

For those looking to purchase a home, it is vital to make sure that there are no risks associated with the exchange before signing any agreement. This includes verifying all documents and financials associated with the transaction as well as ensuring that all parties involved in the sale can deliver on their obligations promptly.

Improve Credit Score

With the right information and dedication, getting a mortgage despite being declined is possible. By taking steps to improve your credit score and increase your income, you can be one step closer to owning the home of your dreams. Additionally, speaking with a mortgage broker can open up lots of options in terms of the lenders you can approach.


The information provided is for illustration purposes only and should not replace any other advice given by professionals. Please contact a qualified financial adviser if you need more tailored advice about mortgages. Furthermore, please ensure that all regulations are followed when purchasing property and taking out a loan to fund it.

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