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What to do if your Mortgage is Declined

While it might seem like the end of the world at the moment, having your mortgage declined is a problem that can be solved. Read on to find out how.

Why has my mortgage been declined?

When you apply for a mortgage, lenders will run affordability checks. These are checks that run over different criteria to assess if a bank or building society should lend you money, and you will be able to pay this capital back, with interest.

While different lenders will rely on different methods and scoring systems to assess one’s affordability, there are some factors which are commonplace among most lenders. These normally take the form of assessing a person’s incomings, their outgoings, their credit file and credit history.

Some of the factors that may lead you to having your mortgage declined include any late or missed payments, defaults recorded against you which have contributed to you having a poor credit rating. Alternatively, the lender may have calculated that you would be unable to afford the mortgage amount with the wage that you are earning. It can even be a simple accumulation of minor details such as not being on the electoral register at your current address & how often you live in your overdraft.

What should I do now?

Okay, so you’ve got a declined mortgage on your hands. Don’t panic, it’s not the end of the world. Readers, where there is a will, there is a way... Therefore, for you to give yourself a better chance of having your application accepted next time, you’re going to need to address the problems in your last application so, make sure you clarify with the declining lender exactly why your application has been declined. This will prevent you wasting time & effort applying to lenders that have a similar criteria.

If you haven't already done so, get a copy of your credit report and assess your credit scoring. This can be a useful way of understanding why your credit rating might have taken a bad turn and how you can make it better.

How can my next application be successful? 

First of all, you’re going to need to make life easy for the lender and then they’ll do the same for you. Become an attractive proposition for them!

The key to a successful mortgage application is to show that you are going to be a responsible borrower. This can be done by showing that you have made regular payments for things on a smaller scale. An example of this can be things like your utility bills, any contracts that you might be a party to such as paying for a gym membership or a mobile phone contract. Paying off any existing debt can go a long way as well.

If your application was refused because your lender doesn’t think you earn enough, then it’s simple, just earn more... We’re kidding! We know this is much easier said than done, so one way you could be more cost efficient would be to cut any small, needless expenses from your day-to-day life. For many, this could be just as simple as not getting that morning coffee before work or cancelling the monthly subscription for the magazine you barely read. What is it that supermarket says...? Every little helps!

If your application was declined because of a poor credit score then you will need to approach a lender that caters for your particular "failing". If it's CCJ's then find a lender who gave kind consideration to people with CCJ's. Believe me, there's a lender for almost every scenario but, as the risk, they are taking on you increases then the rate you'll be charged will also increase.

If you’re worried about your mortgage being declined, use Mortgages Online. We compare 1000s of deals from 100s of lenders, so we may be able to find a mortgage deal you’ll be approved for. To start your next mortgage application, use MO.

Mortgages Online are an online mortgage brokers.


Laura Waller

Laura Waller has been working in the mortgages industry since 2013, joining an independent brokerage in Essex. Laura has CeMAP 2 & 3 – Certificates in Mortgages Advice and Practice. Since then Laura oversees marketing for Mortgages Online, using her experience and expertise to write articles and blogs about mortgages and related topics.

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