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What to do if Your Mortgage has Been Declined on Affordability

See how expert advice could still secure your mortgage with the right lender, even if you've been declined before

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No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: September 27, 2021

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.

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…

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.

Get expert advice immediately if...

  • You’ve had 1 or more mortgage applications declined
  • You’ve been told you’re unable to ‘afford’ your mortgage
  • You’re using a single source income
  • You earn some of your income in benefits, commission or rental income
  • You have high outgoings

If one or more of the above applies to you, it’s important to get expert advice before making an application.

Get Expert Advice

We're so proud of our customers

Helping customers that have been declined in the past is what we do best. Read how we've helped customers that were declined before coming to us, and how we got their mortgages approved!

James and Ella
Bristol UK
Despite having two incomes, we were declined on affordability because some of James' income is paid as commission. Our original lender didn't recognise this type of income, so Online Mortgage Advisor matched us with a lender who did and we managed to get our dream home.
Lauren
York, UK
Being a single mum I really struggled to find a mortgage on my income alone. I didn't match most lenders affordability criteria even though I could afford my rent fine at the time! I was so frustrated, but luckily Ellen my broker found me a deal with a building society I'd never heard of, but were willing to accept me.

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.

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Article key takeaways

  • 01

    You may pass other lenders affordability checks

    Most lenders offer mortgages based on 4.5 times salary, but it may be possible to find an alternative mortgage provider who stretches to 5 or 6 times income. There are also lenders who have a higher appetite for risk and accept supplemental income sources.
  • 02

    The right mortgage broker can find a suitable lender

    If you’ve been declined once on affordability grounds, your best option is to find a mortgage broker who specialises in customers who are looking for a second chance at mortgage approval. They will explore whether you might have grounds to appeal against the lender’s decision and search the entire market for an alternative lender.
  • 03

    Going it alone is risky

    If you’ve already been declined on affordability, the last thing you want is negative marks on your credit report, and that’s exactly what you end up with if you go it alone and re-apply without seeking specialist advice. The right broker can significantly improve your chances of a better outcome next time.
  • 04

    We can help you find a quick solution

    We understand that timing is of the essence if you’re planning to buy a home and a mortgage rejection has held things up. This is why we designed our free broker-matching service to be as simple and quick as possible - 0808 189 2301 or make an enquiry and we’ll set up a free, no-obligation chat between you and an actual human being with the expertise you need today.

Ask us a question

We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects.

Ask us a question and we'll get the best expert to help.

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FAQs

Can I get a mortgage with no affordability check?

No. Mortgage lenders are legally obliged to assess affordability before offering a mortgage under the industry’s latest responsible lending guidelines. In the past, self-employed people with limited or no proof of income could apply for a type of mortgage called a ‘self-cert mortgage’, but this type of finance has since disappeared from the UK market.

Why would a self-employed applicant fail a mortgage affordability assessment?

For the same reasons we’ve discussed in this article, such as not earning enough or having too many outgoings. But it might also be the case that they approached the wrong lender.

Lenders have different ways of assessing self-employed income and if, for example, you could afford a mortgage based only on your retained profits, a high street lender might not have been able to cater for this, while a specialist mortgage provider would have.

Affordability for self-employed applicants is often based on an average of their earnings from the last 2-3 years, but your borrowing power might increase if you were to be paired with a lender who bases their mortgages on your last 12 month’s accounts.

Does bad credit affect mortgage affordability?

Depending on the age, severity and reason for your bad credit, it can affect your mortgage eligibility and might mean you have to put down extra deposit or settle for a higher rate.

Bad credit only affects affordability directly if a significant amount of your outgoings is being spent on debt repayments such as an IVA or a CCJ. If this is the case, then the mortgage lender is likely to take this into account when reviewing your debt-to-income ratio.

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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