If your mortgage application gets declined, there are a number of things you can do to improve your chances of getting approved next time. Don’t rush off to another lender as each application might show up on your credit file.
Common reasons for a declined mortgage application and what to do
Poor credit history
Check your credit file with the credit reference agencies (Experian, Equifax and TransUnion) to see what information they have about you.
If any of the information on your credit report is wrong, you can correct it.
Not registered to vote
You need to be on the electoral register at your current address so lenders can confirm who you are and where you live.
It’s quick and easy to register online at the Electoral Commission or through your local council
Too many credit applications
When you apply for credit, the lender will search your credit report to check your suitability.
Most searches are recorded, leaving a mark on your credit history.
Applying for lots of credit over a short period of time makes it look like you have money problems, so try to avoid taking out new credit deals at least a year before you want a mortgage.
Too much debt
Having too much debt already is likely to reduce your chances of being accepted for a mortgage.
If you’ve got money worries, there’s plenty of free and confidential advice out there to help you.
Find out more in our guide Help if you’re struggling with debt
Payday loans
Any payday loan you’ve had over the last six years will be listed on your file, even if you’ve paid it off on time. It could still count against you as lenders might think you won’t be able to cope with the financial responsibility of having a mortgage.
The impact of having a payday loan will differ from lender to lender and this won’t necessarily mean you will be turned down for a mortgage.
Administration errors
Lenders aren’t perfect. Many of them put the details from your application into a computer so you might have failed because of a mistake or error on your credit file. A lender is unlikely to give you a specific reason why you have failed with a credit application other than it relates to your credit file.
If this happens, then the lender should provide you with the details of the credit reference agency they used.
Not earning enough
You can ask for a smaller mortgage or see if you can get help from one of the government home buying schemes.
Mortgage Affordability Calculator
Use our Mortgage Affordability Calculator to see what you can afford to borrow.
Learn more in our guide Government schemes for first-time home buyers and existing homeowners
Not matching the lender’s profile
Lenders have different underwriting criteria and they take a number of factors into account when assessing your mortgage application. It could be based on a combination of age, income, employment status, the loan to value, property location.
An independent mortgage adviser has experience of the market and is likely to have a better idea of the underwriting criteria and suitability of different lenders.
Small deposit
If you’ve only been able to save up for a small deposit, your applications might be turned down because you want to borrow too much money.
There are some mortgage deals available if you have a small deposit of 5-10%, but you will need to search for them.
You can try saving up for a longer period of time so you have a larger deposit, or there are government schemes to help you if you only have a small deposit.
Learn more in our guide Saving money for a mortgage deposit
Other reasons you might have your mortgage declined
If you’re self-employed or a contract worker
You have to prove you have a steady income by showing tax statements and business accounts for at least the last two to three years.
You might also have to prove you have work lined up for the future – but the decision will vary from lender to lender.
If you’ve lived in the UK for less than three years
Most lenders are unwilling to lend to new arrivals, but not all.
You’ll need to show your employment contract and a visa, which proves you have permission to live and work in the UK.
Where to go for help if mortgage application is declined
A professional mortgage broker or independent financial adviser who specialises in mortgages will be familiar with the mortgages on offer.
They will be aware of what different lenders are looking for before offering someone a mortgage, and will speak to the lender for you.
