If your mortgage application gets declined, there are ways to improve your chances of getting approved next time. It's important not to simply try another lender as each application will show up on your credit file.
What’s in this guide
- Top reasons for a declined mortgage application
- If you have poor credit
- If you’ve made too many credit applications
- If you have too much debt
- If you’ve used payday loans
- If there’s an error on your credit file
- If you’re not earning enough
- If you don’t have enough for a deposit
- If you’ve lived in the UK for less than three years
- What to do after a failed mortgage application
Top reasons for a declined mortgage application
Some common reasons for your mortgage application being declined include:
- your credit history
- too much debt
- your employment history
- you don’t earn enough to make repayments.
Your mortgage application could be declined, even after you’ve been given an agreement in principle (AIP).
Using a mortgage broker could help if you’ve been declined
If you’ve been turned down by a specific provider, using a mortgage broker could help. They’re independent advisers who can look at a range of mortgages from different lenders, and could find you a provider who will accept your application.
If you have poor credit
Lenders will perform a credit check when you apply for a mortgage, and if you have a poor credit score, your application might be turned down.
What to do
Check your credit file with a credit reference agency:
Once you understand your credit score, you’ll want to look at improving your credit rating. View our guide on How to improve your credit score.
Registering to voteOpens in a new window is a quick way to improve your credit score and make lenders more likely to accept your mortgage application.
It’s quick and easy to register online at the Electoral CommissionOpens in a new window or through your local council
If you’ve made too many credit applications
When you apply for credit, your lender will search your credit report. They perform either:
- a ‘soft search’, which can’t be seen by other companies, so doesn’t usually affect your credit file, or
- a ‘hard search’, which does leave a mark on your credit file.
What to do
Applying for lots of credit in a short space of time can make it look like you have money problems.
Try to avoid taking out new credit deals at least a year before you want a mortgage.
How do mortgage applications affect credit?
Most lenders will first check your eligibility with a soft search. This is what’s used when they accept you for an agreement in principle (AIP). If you get turned down at this stage, it won’t affect your credit rating.
The lender will carry out a hard search when you make your formal application. This can affect your credit rating, but if you’ve already passed an eligibility check it’s unlikely that you’ll get turned down.
This means you can check if lenders are likely to accept your application without harming your credit score.
If you have too much debt
If you have a lot of debt, it will reduce your chances of being accepted for a mortgage.
What to do
If you’ve got money worries, it’s worth making the most of free and confidential advice available to you.
Find out more about the free help and support available in our guide Help if you’re struggling with debt.
If you’ve used payday loans
Any payday loan you’ve had over the last six years will be shown on your credit file.
Even if you paid off your loan on time and in full, you’ll have a lower chance of being offered a mortgage. Lenders view payday loans as a sign that you won’t be able to cope with a mortgage.
What to do
Not all lenders will turn you down if you’ve used payday loans. Speak to a mortgage adviser who can find out what deals might be available to you.
Your chances of being offered a mortgage will improve when six years have passed since you last used a payday loan.
If there’s an error on your credit file
It’s possible that there’s a mistake on your credit file. When lenders enter the details of your application, there can sometimes be admin errors.
What to do
Your lender probably won’t tell you exactly why your application was turned down, but you can ask them which credit agency they used.
Once you know this, you can ask the agency to correct any errors on your credit report:
If you’re not earning enough
Lenders will need to see that you’re earning enough to make repayments, so you might be turned down if you don’t, or can’t prove that you do.
What to do
Asking for a smaller mortgage might help. You can work out how much you can afford by using our Mortgage affordability calculator.
If you’re self-employed, you’ll need to make sure you can provide tax statements and business accounts for at least the last two years. Some lenders will also want proof that you have work lined up in the future.
Another lender might still offer you a mortgage
Every lender’s criteria is different. Checking what you can afford to borrow doesn’t usually affect your credit rating, so it’s worth shopping around to find out if you can get the deal you need.
If you don’t have enough for a deposit
If you’ve only been able to save up for a small deposit, you might be turned down because you’re asking to borrow too much money.
What to do
There are some deals available if you have a deposit as low as 5%, but you’ll need to search for them.
Saving up a larger deposit will help. View our guide on Saving money for a mortgage deposit.
You might also want to look at Government schemes for first-time home buyers and existing homeowners.
If you’ve lived in the UK for less than three years
Some lenders won’t offer you a mortgage if you’ve lived in the UK for less than three years.
What to do
There are lenders who will consider your application. Make sure you provide your employment contract and visa, which proves you have permission to live and work in the UK.
Speaking to a mortgage adviser can help you find lenders who will offer a mortgage to new arrivals.
What to do after a failed mortgage application
It might be tempting to apply again straight away, but too many applications in a short space of time can damage your credit score.
Instead, look carefully at the reason your application was turned down. There might be some easy fixes you can do, including:
- registering to vote
- correcting any mistakes on your credit file
- checking our Mortgage calculator to see what you can realistically borrow.
Some other measures might take a while, but will help you in the long-term:
- improving your credit score
- lowering your debt
- saving a larger deposit.
Speaking to a mortgage adviser can help with understanding what you might be able to do to improve your chances of having a mortgage application accepted.
