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Mortgage Declined

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Nov 7, 2022

Mortgage Declined

So you were declined for a mortgage and are trying to figure out how to proceed? You might also be trying to figure out what options you have, but don’t worry; in this article, we’ll be covering precisely this.

We’ll discuss why mortgages are rejected in the first place, how to prevent rejection from occurring again (and how to boost your odds) and what the best practice is for when it happens.

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Mortgage Application Declined

After applying for a mortgage, your mortgage lender will look at your application and assess it according to specific criteria.

They’ll consider the following for mortgage applications:

  • Your income,
  • Your mortgage application,
  • Debts,
  • Whether you’re self-employed or employed by a company,
  • Your age,
  • Credit history,
  • And other variables.

Doing this helps your mortgage lender decide if you can afford your mortgage payments.

Lenders of your mortgage broker have different criteria and standards, so what they assess and how harshly they assess it will differ. However, typically you’ll be refused a mortgage if:

  • The lender has found that you’ll unlikely be able to make your repayments.
  • Your income source is inconsistent and unreliable (which can occur when you’re self-employed).
  • You’ve made several credit applications within the past six months, and many hard credit searches have been conducted.
  • You’re either late or have missed recent debt payments.
  • Your mortgage application form has mistakes on it.
  • Your reason for wanting to take a mortgage is unacceptable.
  • You’ve had a county court judgment (CCJ) against you recently.
  • You’ve not been working for long enough to be considered as having a secure source of income.

You can appeal decisions made when your mortgage application is declined; however, you’ll likely find it hard to argue against the decision made.

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If You Have a Gambling History

If you have a history of gambling, you might find it quite hard to find a lender that’ll accept you. Remember, gambling is not just limited to going to a casino: even online gambling or regularly partaking in the lottery is considered gambling.

Our lenders may, however, still be able to help you. Contact us to enquire.

Mortgage Declined With Agreement in Principle

An agreement, in principle, sets out the groundwork and the major terms of the contract. However, it doesn’t guarantee that you’ll get a mortgage. Your mortgage application might be rejected after the agreement because the lender of your mortgage broker discovered, after a thorough search, that you didn’t meet specific lending criteria.

If this occurs, you should ask your lender about the reason for the rejection and attempt to correct it.

Mortgage Declined After Exchange of Contracts

After both parties have signed the contract, it’s incredibly uncommon that you might be denied. At this point, you are entirely committed to making the property purchase and have made the deposit.

If it occurs, it’s likely for a good reason. But, like when you’re rejected after agreement in principle, you should discuss why this has occurred with the lender. You may have failed to disclose pertinent information on your mortgage application or lied outright. In this case, you will find it challenging to get another mortgage.

Mortgage Declined After Valuation

The lender of your mortgage broker will conduct their own valuation of the property, which could very well lead to your mortgage application being declined. Typically, this will occur if the surveyor is concerned about its suitability as loan security or if they valued it lower than you’ve requested.

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How Rejection Affects Your Credit Score

Here’s the thing: while getting rejected for a mortgage won’t directly affect your credit score, your credit report will show that you applied for a mortgage.

And each rejected mortgage application leaves a hard search on your credit report: these can actually lower your credit score for up to six months.


How to Prevent Denial From Occurring Again

First things first, you should take stock. This means you should assess why you were refused in the first place and address this as best you can.

For example, if you were refused by the lender of your mortgage broker because of your credit score, then there are quite a few things you can do:

  • Make sure you pay your bills on time: people need to understand how negatively this can affect your credit score. And while not every bill counts towards your credit score, many do, and paying them on time shows mortgage lenders that you can manage your finances well.
  • Assessing financial association with others: if you’ve got a joint bank account, you should evaluate whether the other person might affect your credit rating. You should reconsider your commitment and break these financial associations if they are.
  • Check for mistakes: Do a deep dive into your credit report (which you can get for free on websites such as Credit Karma and ClearScore) to see if there are any mistakes. Remember that even a simple typo can badly affect your credit report.

On top of this, make sure you don’t apply straight after being rejected. You’ll want to wait a few months before reapplying with the current lender or applying with a different lender.

Remember, there’s no guarantee that another lender will accept your mortgage application. However, our mortgage brokers will be able to guide you, prevent a reoccurrence and ensure mortgage approval.

Get a Guarantor Mortgage

A guarantor mortgage is a mortgage loan where a parent, family member, spouse or friend takes some of the mortgage risk. If you’re being rejected because your credit score isn’t too good, you can’t afford a high downpayment, or you’re young and don’t earn a lot of money, a guarantor mortgage might be the boost you need to get accepted.

The other party assumes risk by either promising to make your mortgage payments should you forfeit on them or by putting their own home as a guarantee.

For example, if you owe a lender £200,000 and after repossessing and selling your home, they could only recover £175,000, then they may have the right to repossess your guarantor’s home. Of course, this is a considerable risk for the guarantor, so make sure you can make your mortgage payments throughout the entirety of the mortgage period.

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Mortgage Offer Expiry

Usually, mortgage offers are valid for six months, so if you take longer than that to make your purchase, you’ll have to reapply. This is different from having your mortgage declined. And it’ll typically only occur if you’re purchasing a new build with delays.



How soon can you apply for a loan after being declined?

It might be better to wait a couple of months before applying again, especially if you’ve declined more than once. Collecting hard credit inquiries can damage your credit, making it even harder to get accepted in the future.

Why would I be declined a mortgage in principle?

After getting an agreement in principle, getting rejected for a mortgage is still possible. This usually occurs if the lender discovers something, after the fact, that didn’t quite meet their lending criteria.

How often do mortgages get denied?

Just over 40% of 18 to 24-year-old current homeowners were denied a mortgage before purchasing their home. In addition, 15% of 35 to 44-year-olds were denied a mortgage, along with 8% of 45-50-year-olds.

What prevents you from getting a mortgage?

There are many reasons you may get declined for a mortgage. Still, most often, this is because: you don’t have sufficient income, you’re applying for a loan type for which you’re too young (such as a buy-to-let mortgage), you have a poor credit history, or you have excessive debt in relation to your income.

What credit score do you need to get a mortgage?

There isn’t a credit score you need to be approved for a mortgage: although having a good score puts you in good stead with mortgage lenders. There are three credit reference agencies that use different credit scoring systems: TransUnion, Equifax and Experian. Scores below 566 for TransUnion, 380 for Equifax, and 721 for Experian are considered bad.

How do I make sure I get approved for a mortgage?

To make sure that you get approved for a mortgage in the future, you should evaluate and fix any mistakes on your credit report, attempt to improve your credit score by settling debt and prepare a large downpayment to show the lender that you know how to save.


Mortgage Application Declined? Give Us a Call.

At LoanCorp, we pride ourselves on getting all our clients great mortgage deals that they can afford. As a mortgage broker, we understand the stress of committing yourself to a mortgage loan and will answer any queries and concerns you may have.

If you’re struggling to get a mortgage, don’t hesitate to call us at 0808 301 9509. You can also contact us by completing our short online form, where we’ll get back to you within two hours from Monday to Friday and within four hours over weekends and bank holidays.

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