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Mortgage Declined?

Mortgage Declined? Find out your next steps and alternative solutions.

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Why mortgage declines happen

We receive a lot of enquiries through from customers that have had their mortgage application declined.  

Usually, there are four main reasons why mortgage declines happen, these are: 

  • Failing credit score.  
  • Bank won’t lend you enough. 
  • Income split. 
  • Property type.  

The good news is that we have access to many lenders each with different lending criteria so we can usually help. 

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Has your mortgage been declined after an agreement in principle?

A mortgage agreement in principle is a non-document, they are often not worth the paper they’re printed on.   

It’s not until you complete your full mortgage application, provided all your documentation, and enter the underwriting process that you’ll know if you’ve been accepted or not. 

If you have had your mortgage declined after an agreement in principle, it’s worth speaking to an experienced mortgage broker to understand your options.  

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Have you had a recent declined mortgage application?

If you have recently had a declined mortgage application, please don’t go firing off any more applications without seeking the help of a knowledgeable mortgage broker.  

Hard credit searches will be performed by each mortgage application you do, potentially making your credit score lower and making your chances of getting a mortgage accepted slimmer.   

We need to find out the reason/s why you were declined a mortgage and then research lending criteria from other banks to see if your application fits.  

Popular reasons for a recently declined mortgage application are: failed credit score, bank won’t lend enough, income split, and property type.  

There are a wide range of specialist deals available in the market via a mortgage broker including bad credit mortgages and there are some lenders that are better with income stretches and mortgages for the self-employed then others. 

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Declined Mortgage – Frequently Asked Questions

Can you be declined a product transfer mortgage?

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It is rare; however, it is possible to be declined for a product transfer mortgage.  

With most product transfer applications, if you have a good payment history with your mortgage payments and your lender is confident that your circumstances haven’t changed then they won’t perform a credit search and affordability assessments.  

However, if you have missed or late payments with your mortgage and your lender suspects that your personal situation has changed since you took out your original mortgage then checks can be performed causing your application to be declined.  

Also, your lender reserves the right to conduct full affordability and credit score checks on any customer pre and post offer until completion. These spot checks could cause a declined product transfer mortgage application.  

As part of our service, we perform free product transfer mortgages for our customers helping them overcome any hurdles that we face along the way.  

Does a declined mortgage affect my credit score?

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Yes, it will, when you have a declined mortgage application on your credit file it will affect your score, however this is often just temporary.  

When you apply for a mortgage, your lender will do a hard credit score and this will be visible on your credit file. If this application declines and then you apply again, your new lender will see that you’ve just had a recent decline and wonder why.  

Firing off multiple mortgage applications and being declined could impact your ability to get accepted for a mortgage due to the number of hard searches on your credit file.  

Utilising the services of an experienced mortgage advisor will improve your chances of being accepted for a mortgage utilising their experience and knowledge of lending criteria and products.  

What happens when your mortgage application is declined?

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When your mortgage application is declined, you’ll receive a communication from the lender as to the broad reason why you’ve been declined, they’ll often not be able to disclose the exact reason and it’ll be up to you to find out why your application was out of criteria and start again with a new lender 

What to do if a mortgage is declined?

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Following a declined mortgage application, a good place to start is by getting hold of an up-to-date copy of your credit file to see if you have anything registered and that your address history and any financial associations are correct.  

If your situation is more complicated for example you have irregular income, you’re self-employed, or you have a lot of credit commitments then you’ll need to have in-depth knowledge of lending criteria ahead of applying to see if you fit.  

A mortgage broker will be able to provide help and guidance to help you overcome a declined application.  

Why would a mortgage be declined?

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A mortgage gets declined for four main reasons: 

  1. Failed credit score – This will be because of a hard credit search, your mortgage lender will have access to in-depth credit information, much more that you or we are able to see. More in-depth searches are done in the background as part of a mortgage application and can often result in a decline. It is important to remember that credit searches can be performed by the lender at any time during application or offer until your mortgage completes.  It’s advisable to avoid any unnecessary searches during a property purchase or remortgage such as getting a new car or sofa etc on hire purchase.
  2. Bank won’t lend enough – Often during a mortgage application a decline can occur due to you not being able to borrow what you require with a lender. This will often be because of your income split, credit commitments, age, or amount of debts.
  3. Income split – If you receive income from a variety of sources such as self-employment, benefits, pensions, maintenance payments, etc without in-depth knowledge it can be difficult to find a lender that will be the best for your personal situation.
  4. Property type – As a result of a valuation or survey, your mortgage application can be declined due to the lender not liking the property type for security. If you are buying an unusual property or a property with non-standard construction then you’ll need to do more in-depth research before an application is submitted to avoid a decline.  

Can a mortgage decline be overturned?

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Yes, however, it’s difficult to get a mortgage decline overturned.  Nowadays there is no or very little manual underwriting with mortgage applications therefore overturning a declined application can prove hard if the computer has said no.  

We have managed to get mortgage declines overturned using our industry contacts for further information and utilising our experience and knowledge.  

Depending on why an application has been declined will depend on the actions we’ll need to perform.  Often, it’s a case of finding a new mortgage lender who will be a better fit for your individual situation.  

Our mortgage advice team will aim to place your mortgage application with the right lender first time around avoiding any un-necessary stress and time wasted.  

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A dedicated case manager will help you prepare your mortgage application and keep you up-to-date wany updates provided by the mortgage lender.

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Securing your 90% ltv mortgage can be a stressful experience. Let us take the stress away and help you find the perfect deal for your circumstances.

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Alongside your mortgage, your mortgage advisor will recommend insurance products to safeguard you and your family.

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Our aim is to save you time and money. We will search 1000s of 90% mortgage deals to try find a tailor-made solution for you.

We're experienced and knowledgeable.

We have been working as a mortgage broker for over 20 years now, our job is to apply our experience and knowledge to your case.

Your mortgage advisor will be with you every step of the way.

From your initial point of contact to securing your 90% mortgage product, we will hold your hand throughout the whole mortgage journey.

Declined Mortgage – Popular Situations

Mortgage declined due to a late payment.

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If you have received a mortgage decline due to a late payment there may be alternative options available to you.  With a late payment, what these options are will depend on when the late payment occurred, how much it was for, whether you’re now up to date, what type of payment it was for example if it was for your mortgage or a mobile phone etc.  

You have a better chance of being accepted for a mortgage with a late payment if you have a bigger deposit and the more historic the late payment was the better.  The reason why you missed the late payment is also important to a mortgage lender.  

Mortgage declined before completion.

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Even after you have received your mortgage offer your mortgage lender can perform credit checks on you, therefore, it is possible to be declined a mortgage before completion. This is common if your mortgage is taking a long time to complete or your lender suspects that your personal situation has changed since you completed the application process.

To avoid being declined a mortgage before completion it is advisable to avoid any unnecessary credit checks such as for a new sofa on interest-free deals, car loan, store cards etc.

If you have had your mortgage declined before completion and your lender will not overturn your decision, it’s a case of starting the process again with a new lender who is a better fit for your situation.  This could cause the property chain to fall, and money could be lost by all parties.

Mortgage declined due to ground rent.

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If you’re buying a lease hold property for example an apartment there will usually be a ground rent charge to factor in to your affordability.  Ground rent can vary significantly between properties therefore it’s important to gather all relevant information from the estate agent ahead of starting an application.

There are rules within mortgage criteria around ground rent and how much this can be and what rights the leaseholder has on the property therefore it is possible to get your mortgage application declined due to the cost of the ground rent.  

There are also future increases in ground rent rules that your lender will consider as part of the application process.   

Shared ownership mortgages are available specifically for customer purchasing a percentage of a property under the scheme. These consider ground rent and any other fees that are payable.  

Mortgage declined by an underwriter.

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As part of a regular mortgage application your application can be declined by an underwriter. The reason why your application has been declined by an underwriter will not be disclosed.  

Popular reasons such as non-disclosures on the application form, suspected fraud or money laundering, failed credit score following a more in-depth lender check, or anything else.  

A mortgage broker will help you overcome any underwriter declines and find a more suitable lender for your situation.  

Mortgage declined on affordability.

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A mortgage decline on affordability can occur because of undisclosed credit commitments on the application or inflated/irregular income.

A solution for those who have been declined on affordability would be to consider another lender who is more suitable for your situation. In a small number of cases, it might be possible to overcome a mortgage decline on affordability with lots of evidence.

If you are going through a debt consolidation remortgage application, then working alongside a mortgage broker and working out the money saved per month by doing this will help your application.  However, doing a debt consolidation mortgage application without advice is not recommended as you could end up in a worse situation and lose your property.

Mortgage declined after a valuation.

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Being declined a mortgage following a valuation should alert you to the fact that your mortgage company do not feel that the property you are buying is worth what you are paying.

This should not be taken lightly, and you need to really think about how much you are wanting to buy this specific property or look for another.

Mortgage valuers are professional people, and they are experienced and knowledgeable at what they do.

The options you have when you have a mortgage declined after valuation are to renegotiate on the purchase price with the valuation figure in mind, find lots of evidence from similar properties that it is worth what you’re paying, or pull out and buy another property.

More often than not, negotiation is the most popular course of action due to the fact that other purchases will more than likely have the same problem as you.

Mortgage declined after a DIP (decision in principle).

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Having your mortgage declined after a decision in principle (DIP) is common.  A DIP is only a rough estimate of what you can borrow and is no way and shouldn’t be considered as acceptance of a mortgage.   

In fact, many would argue that a DIP not worth the paper it’s printed on, until the application process is started, and a hard search is performed and completed then you’ve not been approved.  

You can get declined a mortgage following a DIP for any reason, credit score, property type, income mix, or anything else.  

Seeking help from a good mortgage broker will ensure that your mortgage application goes with the right lender the first time!   

You’ll see lots of properties that get marked as sold as the buyer has presented a DIP document to the estate agent, however, a few weeks later it can be back for sale as the property has fallen through because the buyers application had been declined following the DIP.  

Mortgage declined after offer.

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It is possible to get your mortgage application declined right up until completion.  If there’s been a long time since your application, maybe your property chain is taking a long time, or your lender suspects that your personal situation has changed then they will perform new affordability checks and credit score you again.  

Being declined after offer can he heart breaking for some customers as it can result in them losing lots of time, money, and possibly their property chain will fall through.  

Most of the time we’ll need to start again with the mortgage process and find a lender that is more sympathetic and/or suitable for your new situation.  

Avoiding any credit searches after you have received your mortgage offer will help your chances of not getting declined.   

Mortgage declined after a survey.

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Again, very similar to a valuation, if your mortgage is declined following a survey then this should not be ignored.   

Surveyors are professional people, and they are experienced at what they do, their findings should always be looked in to further.  Not doing this could result in you having problems in selling the property in the future which would affect it resale value.  

The popular reasons why a mortgage gets declined after a survey are: 

  • Cladding. 
  • Damp. 
  • Japanese knotweed or similar. 
  • Construction/structural problems.  
  • Asbestos.  

Mortgage declined due to bank statements.

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As part of the application process lenders will look at your bank statements, initially up to 3 months and they then may request further statements or statements from different accounts including business ones.  

Lenders will not like large unaccounted for transactions, gambling, pay day loans, lots of transfers to and from other accounts etc.  

If your mortgage is declined due to your bank statement conduct, then we may need to look for a new lender or have a good explanation with evidence.  

For example, they see a large transaction of £3,000 enter your account, maybe you got this from a recent private car sale.  Evidence that could prove this would be the online listing and the change of ownership form from the DVLA etc. 

Mortgage declined due to service charge.

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Service charges on leasehold properties can be a significant cost and these need to be factored into the application from the outset.  Your mortgage lender will look in to the history of the service charge and see that the increases have been in recent years and predict what these will be in the future.  

You’ll need to demonstrate that the service charge is affordable to you both now and when it increases in the future.  

If the freeholder has badly managed the service charge within the building then a sky high service charge will make the property fall significantly in the future meaning it’s high risk for the lender.  

To reduce the risk of being declined a mortgage due to the service charge getting as much information from the estate agent is important so you know what you’re looking at.  Service charge will also be picked up later in the process as part of the conveyancing also.

A conclusion to declined mortgages.

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To conclude about being declined for a mortgage, there is a lot that can go wrong along the way and time and money can be wasted without a good mortgage broker by your side and doing your research.  

Experience and knowledge are vital and the faster that a potential decline can be picked up in the process the better.  

Getting a mortgage is not simple about getting the best interest rate, it’s about selecting the best lender for your personal situation.  All lenders have different criteria aimed to help various groups of people.  


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