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What stops you getting a mortgage

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Feb 16, 2023

5 Main things that stop you getting a mortgage in the UK?

Are you thinking about mortgage applications? As mortgage brokers, we offer free mortgage advice; we are here to make applying for a mortgage as stress-free as possible.

We have a few mortgage providers lending for all different circumstances; you may have had a mortgage declined, don’t feel disheartened we can help get you on the property ladder.

It pays to be aware of the possible roadblocks that could hinder your path to homeownership. Continue reading to understand why mortgages can be declined.

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So why could you get stopped from getting a mortgage?

Many customers find it challenging to get a mortgage. Some lenders have stricter criteria than others.

You might have low credit, poor credit history or a failure to meet affordability requirements.

You might also be self-employed and lack sufficient income proof.

It can be challenging to choose a mortgage lender. You risk going it alone and failing to understand the whole market. This could lead you to the wrong provider, fail their eligibility checks, and end up with ugly black marks on your credit report.

Even if your application is approved, you might pay more interest if you don’t find the right lender.

This guide will highlight the significant factors that can prevent you from getting a mortgage without specialist guidance and show you how to overcome these obstacles.

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What could stop you from getting a mortgage?

High street mortgage lenders can be very selective about who they approve to finance. Even people with good credit history can find it challenging to get financing if they try to do everything themselves and have no knowledge of the market.

Markets are vast, and each mortgage lender will have different criteria. Understanding the hurdles you may need to overcome to obtain the financing you require is essential.

These are the top five reasons you might not be able to get a mortgage in the UK.

  • Too little deposit
  • Failure to meet the lender’s affordability requirements
  • Bad Credit
  • Self-employed
  • Problems with the property
  • Age restrictions
  • Other reasons

Continue reading to learn more about these issues that could prevent you from getting the mortgage you want.

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1. There is not enough deposit

Many potential home-buyers find that saving enough mortgage deposits is their most significant obstacle to achieving their goal of owning a property. Most lenders won’t approve your application unless it has a minimum 10% deposit. If you want the highest interest rate, you will likely need more.

Suppose you don’t have more than a 10% deposit to purchase the property you desire. In that case, it is essential to remember that some mortgage providers will accept 5% deposits under certain circumstances. Our advisors know these people.

For borrowers who have no deposit, there are workarounds. If you have a relative willing to help, talk to a broker about guarantee mortgages.

2. Failure to meet affordability requirements

Customers cannot get the mortgage deal they desire due to the stringent affordability requirements that mortgage lenders use in this current climate.

An income multiplier rule is one of the primary ways your potential mortgage provider will evaluate this.

Some mortgage lenders will limit their lending to 4.5 times your annual income. Others will allow you to borrow up to 5 times. A minority of applicants can extend their loan limits to 6 times under certain circumstances. If you want to borrow £250,000 to purchase the property you are interested in; you will need to combine your earnings with enough deposit to cover the difference.

Debt-to-income ratios

Even if your income is sufficient to cover the mortgage payment, the lender could consider your debt/income ratio a concern. If they feel you will struggle financially, they may refuse to lend you a mortgage. As most lenders are flexible about this, there is no set rule as to how much your debt-to-income ratio should be.

Your prospects could be hurt if you approach a mortgage lender with a lower income multiple or who is less willing to take on debt-to-income ratios. This could mean you cannot get the financing you need or pay more interest.

The good news is that we can match you with another mortgage provider with our expert brokers who offer higher-income multiples and are willing to take more significant commercial risks.

3. Bad credit

Bad credit history can prevent you from being approved for a mortgage. This is particularly true if you have a severe credit problem such as a repossession, bankruptcy, or are a high-street lender.

Your credit problems will impact your chances of getting a mortgage. Most mortgage lenders base their decision to lend to a poor credit applicant on your age, credit score, and credit history. Some are more strict than others.

Some mortgage lenders may refuse to lend you money if they believe your credit history makes you too risky. This can damage your credit score and make it more difficult to get finance in the future.

Even if your credit score is not perfect, there’s no reason for you to lose heart. The brokers we work with can match you with the best specialist bad credit mortgage lender. They can also offer ways to mitigate the risk of your credit problems, such as extra deposits or credit repair.

Learn more about mortgages for bad credit.

4. Self-employment without income proof

The main obstacle to self-employed individuals getting a mortgage is proof that they have enough income. Most mainstream mortgage lenders will require you to provide evidence of income if you trade in this manner.

This is why many newly self-employed people struggle to find the financing they need. However, there are possible fallback options if you’re in this situation.

We work with whole-of-market brokers with solid relationships with lenders specialising in self-employed customers. They have a better understanding and appreciation of their needs. These lenders are more likely to consider self-employed mortgage applicants with accounts that last less than 12 months. They also have a better understanding of non-standard income.

5. Property issues

You may need expert advice if you are buying an unusual property or one with issues. Mortgage lenders should be cautious about dampness, Japanese Knotweed, and high flood risk, although specialist lenders are more likely to help with a flood zone mortgage.

Non-standard construction properties may also pose a problem for some mortgage providers.

The UK has a lot of properties that aren’t built from bricks or mortar. This means that they may not be eligible for mortgage financing.

There are mortgage companies that specialise in non-standard properties and have a better understanding of the implications for unusual builds. They are more likely than high-street banks to approve a non-standard-construction mortgage or deal involving a fixer-upper property.

To learn more about the types of property lenders are most cautious of, and how you can increase your chances of getting finance in these cases, please see our guide to building materials.

6. Age restrictions

Many people cannot get a mortgage after retirement due to their age. You may find your options limited if you are a pensioner. Finding the right lender without specialist advice can prove challenging.

The good news is that mortgage lenders will lend to seniors of all ages, provided they meet specific criteria. While some lenders may not offer mortgages to seniors over 75, others will lend to those aged 85 and above.

We can match you with a broker specialising in late-life lending if you are concerned about your age preventing you from getting the mortgage you need. Based on your age and other circumstances, they will know which lenders can offer you the best mortgage.

7. These are just a few of the other things that could prevent you from getting a mortgage

These are the seven most common reasons people cannot get a mortgage. Here are some other more general reasons why applications fail.

  • You are not on the electoral roll. To vote at your current address, lenders will need your personal information. However, there is an easy way to fix it. Sign up online at the Electoral Commission website or your local council.
  • There were administrative errors in your application form. Take the time to complete your mortgage form carefully. Don’t guess the answers. It could hurt your application if you estimate how long you have lived at your current address rather than providing an accurate solution.
  • Contact us if you have any questions about your mortgage application. As part of their service, the mortgage brokers we work with will assist you with all paperwork.
  • You have taken payday loans: A history of payday loan use can alarm mortgage lenders. Many will consider it a sign of financial mismanagement. It is a good idea to seek specialist advice if you have any payday loans on your credit report. For more information, see our guide on payday loans and mortgages.

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Talk to an expert and let’s get your mortgage passed today!

Contact us if you have any concerns about how these issues might impact your chances of getting mortgage approval.

We can match you up with a mortgage broker to provide bespoke advice. Failure to meet the lender’s eligibility requirements could affect your chances of getting a mortgage or result in a lower interest rate.

Our advisors have a deep understanding of the market. This means that they will match you with the right lender the first time.

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