Mortgage application declined? Here’s how to improve your chances

At Unbiased, we work closely with lots of experts to get the best advice for you.

When it comes to mortgages, there’s a lot of misinformation and confusion over why one application has been accepted and why one has been rejected.

If you’ve recently had a mortgage application declined or are wondering how you can avoid getting an application rejected in the future, we’ve asked our experts to pull together some of the most common reasons why applications are rejected, and how you can avoid falling into the same pitfalls.  

Why was my mortgage application rejected? 

There are a few different reasons why a mortgage application can be rejected. 

But it’s important to remember that just because your application with one broker has been rejected, it doesn’t mean you can’t get a mortgage at all.

According to the experts, here are some of the most common reasons why mortgage applications get rejected. 

• Self-employed: Being self-employed can often mean you have a less secure role or income. It doesn’t necessarily mean you will be rejected, but you should pursue a broker with specific mortgage options for those who are self-employed.
• Poor credit history: Poor credit history is one of the most common reasons why people are rejected for mortgages. Your credit score takes into account your existing debts and obligations and gives lenders an indication as to whether or not you would be capable of repaying.
• Affordability: The lender might simply decide you likely can’t afford the repayments. If this has happened to you, find out why this could be the case and assess how true it is. You could try again with a different broker or reassess your application.
• Too much debt: Pay down as much debt as you reasonably can before starting an application. If it looks to a lender like you have too much outstanding debt, you will find it tough to get a mortgage approved.
• Mistakes: It might be that you’ve missed out some key information or forgotten to include other pieces. Mistakes happen, but it can damage your application.  

Mortgage declined after agreement in principle 

When you reach an agreement in principle with a mortgage lender, it does not guarantee you a mortgage.

According to the mortgage experts we spoke to, an agreement in principle is reached when a lender makes a quick calculation, with rough costs, as to whether you could be a good borrower. This is not the same as a concrete commitment.  

If your application is rejected after an agreement in principle, it means the lender has found something in your credit history.

You need to speak to the lender to find out what it is and why it has compromised your application. If you can, correct this before applying again.  

Can you still get a mortgage with poor credit? 

Yes. It’s not true that one mortgage rejection means you will be rejected everywhere.

Different credit reference agencies and lenders will have their own calculations and standards on what can and can’t affect your credit score, so don’t be put off again by applying elsewhere. 

This being said, it is worth finding out what has pushed your credit score lower.

It won’t be exactly the same between different agencies, but if there are outstanding debts and black marks on your credit score, it could suggest you need to improve your score before trying again.  

Consider what has pushed your score down and address it before you go further. 

What to do next after a mortgage application has been declined? 

The most important thing to do after your mortgage has been declined is to find out why.

Speak to your broker or the lender to find out why you were rejected. If you think that there is something wrong with your credit history, you could try speaking to one of the big credit reference agencies.

Take some time away from making applications to assess your documents and then, when you think you’re ready, apply again. 

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

There’s no fixed answer as it depends on how quickly you are able to correct some of the existing issues with your previous application.

You could choose to reapply for another mortgage within a matter of weeks or months. If you weren’t already, you could consider making your next application with a mortgage broker or through a manual underwriter who will carry out a more comprehensive verification of your circumstances.

In some cases, this could significantly increase your chances of getting your application accepted.  

How can you avoid having an application declined?  

As mentioned above, there are some things that will harm your application and some easy steps you can take to improve your chances of getting an application accepted.

According to the experts, here are four quick and easy ways to maximise your success rate.   

• Have a credit history: It might sound counter-intuitive, but not having a credit history can work against you. Lenders, brokers and underwriters need to be able to assess your credit history before making a decision, so be sure you have a credit history.
• Register on the electoral roll: Being on the electoral role confirms you as a permanent citizen in the UK and helps with the verification process.
• Only use credit where necessary: Don’t use credit to make lots of different spending commitments as this can put your application in a bad light. Use credit sparingly. 

• Stay in your job: Being in your job for at least six months shows that you have a relatively secure position. If you change roles regularly, your income is variable. If rates were to change, your future affordability could be affected by this, so make sure you’ve racked up some months in your current role before going elsewhere.  

The world of mortgages can sometimes seem like guesswork, but mortgage brokers can help demystify the process altogether.

With thousands of expert mortgage brokers already using Unbiased, you can find the perfect broker for your needs.

If you've encountered issues with declined mortgage applications or need help with your property endevours, you can find your next adviser on Unbiased.