What to do if Your Mortgage has Been Declined on Affordability

Having a mortgage declined on affordability grounds can feel like a heavy blow to your homeownership ambitions, but it’s important to remember that there could be ways to salvage them, and you’ve come to the right place to find out what they are.

In this guide, you’ll learn…

• What to do if you’ve been rejected for a mortgage because of affordability
• How to find a lender who’s more likely to approve you based on your income and outgoings
• And how a mortgage broker can help you out in this situation.

But rest assured, being declined due to affordability is more common than you may think, and just because one lender has declined your application, doesn’t mean others will too.

What to do if you’ve had a mortgage declined because of affordability

First and foremost, don’t give up hope. It’s only natural to feel upset and disappointed if this has happened to you, but don’t lose sight of the fact that being declined for a mortgage because of affordability isn’t the same thing as being unable to afford a mortgage.

Not every mortgage lender calculates affordability in the same way, so being declined by one doesn’t necessarily mean things will go the same way with another.

If you’ve had a mortgage application rejected because of affordability here are the steps to take to boost your chances of still getting the finance you need…

1. Don’t re-apply straight away
   Although there might be other lenders who would be willing to approve you based on your income and outgoings, seeking one out straight away could be detrimental. Too many applications in a short space of time can reflect negatively on your credit report and jeopardise future finance applications.
2. Get the right advice as soon as possible
   A quick enquiry with us is all it takes to be matched with a mortgage broker who specialises in securing mortgage applications that have previously been declined. You can speak to them today to find out what your options are and how to maximise your chances of passing the lender’s affordability checks the second time around.
3. Let your broker find a deal right for you
   Your mortgage broker will take it from here. If there are grounds to appeal against the lender’s decision to decline you on affordability, they’ll take the lead on that, but they will also explore whether finding another lender who assesses affordability differently is your best option.

Why mortgage applications are rejected on affordability grounds

So a mortgage lender has told you they’re declining your application because you failed their affordability assessment. But what does that actually mean?

Here we have outlined why mortgage applications are declined on affordability grounds, and why that shouldn’t be the end of your homeownership aspirations…

You may not have enough income

This is the most obvious reason why an application has failed the affordability checks, but if a lender has told you this is the case, what they might really mean is that your salary doesn’t stretch far enough in line with the income multiples they based their mortgage offers on.

Most mortgage providers offer mortgages based on 4.5 times the applicant’s salary, but keep in mind that there are brokers in our network who can help you find a lender who uses higher income multiples than this. While you might have been rejected because 4.5 times your salary doesn’t amount to a high enough mortgage for your needs, a lender offering 5 times income, or six times income, could give you a potential lifeline.

Find out what you maximum borrowing could be based on these income multiples by using our mortgage calculator

Your outgoings could be too high

Mortgage lenders will look at your debt-to-income ratio when carrying out their affordability checks. This is basically your fixed outgoings offset against your income so the lender can see how much money you have left over after your usual financial commitments.

Having significant outgoings can affect the amount you’re able to borrow, but this is usually assessed on a case-by-case basis. There is no specific percentage your debt to income ratio needs to be to qualify for a mortgage, so if a lender told you your’s was too high, there’s always a chance a broker can find you another one with a different policy on this.

The lender won’t recognise your total income

Perhaps you were relying on other sources of income alongside your main salary to bulk up your affordability? Some mortgage lenders aren’t keen on this while others will only let you declare a capped percentage of things like bonuses, commission or benefits.

But the good news is that there are lenders who may let you declare 100% of any…

• Bonuses, commission or overtime
• Benefits
• Investment income
• Rental income
• Retirement income
• And any other legal source of capital you have

Your financial position is considered unsustainable

Mortgage lenders don’t just look at your current income and outgoings when assessing affordability, they’re also interested in how they might change in the future. If they have any reason to believe that your circumstances might change or you’d struggle to cope with an interest rates hike, they might reject your mortgage application.

If this has happened to you, the thing to remember is that every mortgage lender has a different appetite for risk, and there’s a good chance you approached one where it wasn’t high enough – speak to a broker to be matched with one who is better placed to help you.

What to do if you can’t remortgage because of affordability

This is a common scenario that homeowners find themselves in if their circumstances have changed since they took out their original mortgage. If your income has fallen or your outgoings have increased at any point during the mortgage term, it might be the case that you no longer meet your current mortgage provider’s affordability criteria.

If you’ve been declined for a remortgage on affordability grounds, making a quick enquiry with us could provide you with an immediate fall-back solution. We can match you with a broker who specialises in salvaging remortgage applications just like yours.

A specialist broker from our network can help you out by pairing you with a lender who…

• Offers remortgages based on higher income multiples
• Approves customers with higher debt-to-income ratios
• Accepts any supplemental sources of income you might have
• Has a higher appetite for risk than high street lenders

If you were declined for a remortgage because of affordability there’s a good chance that you either approached the wrong lender or used the wrong mortgage broker. But by using our free broker-matching service, you can rest assured that the expert we handpick for you will find you the remortgage lender where your income goes furthest.