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What to do if You’ve Been Refused for a Mortgage by Halifax

Updated: May 7, 2021

Pete Mugleston
Author: Pete Mugleston Mortgage Advisor, MD

Important

Halifax is a good, well-respected mortgage provider but no lender in the UK is able to accept every single application they receive. The aim of this article is to help you understand what your options could be if your mortgage application has fallen outside of Halifax's lending criteria.

If Halifax have declined you for a mortgage, or if you think they’re going to decline you, it’s okay to feel frustrated or disappointed, but don’t worry, we’re here to help. The right mortgage broker can still help you get the outcome you’re looking for, whether that’s with Halifax after some re-negotiation or another mortgage lender who turns out to be a better fit for your needs and circumstances.

The key thing to remember is that being declined by Halifax is by no means the end of the road for your mortgage plans.

Common reasons Halifax might decline mortgage applications

1. Halifax might need a larger deposit from you

With the exception of first-time buyer products that Halifax recently brought back to the market, the lender typically offers residential mortgages with a maximum loan-to-value (LTV) ratio of 85%, which means you’ll need a mortgage deposit of at least 15% of the property’s value.

Customers with anything less than that amount might find that Halifax will turn down their application, while first-time buyers are now able to apply for products with up to 90% LTV.

If you’ve been declined by Halifax because you have less than 15% deposit, don’t panic. There could still be options available. Firstly, you could delay your application and save up extra, but a better course of action might be to find another lender who is willing to accept a 10% deposit or less. These lenders exist, but can be difficult to find unless you apply through the right mortgage broker. The brokers we work with know the market inside out and can introduce you to one of these lenders for free, so you won’t have to put your plans on hold.

2.Bad credit issues have come to light during application

You may have been promised a mortgage in principle by Halifax and then declined on full application due to bad credit. This is because they’ll often consider granting an agreement in principle (AIP) after carrying out their initial checks and a soft credit search. But during the underwriting process, a hard credit check is carried out and the full extent of any credit problems you have will come to light.

Having a mortgage offer declined after the AIP stage can be disheartening, but try to stay upbeat and remember that there could be fallback options available. For instance, a mortgage broker can help you repair and optimise your credit report before you re-apply, or help you find a specialist lender with more flexibility than Halifax when it comes to bad credit.

Halifax do sometimes consider offering mortgages to customers with most types of bad credit. However, depending on the severity, they can reject for any reason including CCJs, IVAs, mortgage arrears and even discharged bankruptcies.

The bank judges bad credit mortgage applications on a case-by-case basis but, depending on the severity of your credit issues and how recent they were, Halifax may well decline you. But that isn’t to say another lender will do the same – a bad credit broker, like the ones we work with, could still help you get a mortgage through one of the specialist lenders they have a relationship with.

3. You’re newly self-employed 

If you recently turned self-employed, there’s a good chance you’d have a mortgage application declined by Halifax. The lender specifies that self-employed applications must have at least 12 months’ trading under their belt before they can be considered for a mortgage. In fact, they prefer customers with at least two years’ accounts.

But luckily, those who recently turned self-employed could potentially have a few options if they were rejected on these grounds. One would be to delay their application until they have enough trading history, though this is less than ideal. A better alternative would be to speak to a mortgage broker who specialises in self-employed customers. There are lenders who may consider getting the ball rolling on your application based on just nine months’ trading history, and the right broker will know exactly who they are.

 

4. You may not have met Halifax’s affordability criteria

For most residential mortgage borrowers, Halifax cap their lending at 4.75 times the applicant’s income. If they declined you for a mortgage on affordability grounds, it’s likely that the combined earnings of each applicant didn’t add up to the full amount they need to borrow when this calculation was applied. Your outgoings may also have been factored into the equation, especially if you have other substantial financial commitments.

If this was the reason your mortgage application fell through, there could still be lots of options available. If you have other sources of income such as commission or benefits, a mortgage broker could help you re-negotiate with Halifax with this capital declared. Failing that, there are niche lenders who may let you borrow x5 income or even x6. The right mortgage broker will know exactly which lenders to approach for higher income multiples, so keep in mind that getting your ideal mortgage is still absolutely possible.

5. A valuation check may have uncovered property issues

One of the main reasons Halifax might decline a mortgage application after valuation is because deal-breaking property issues were detected during the surveyor checks. Halifax accepts various build types that are classed as ‘non-standard’ including 100% timber construction and mundic block, but if, for example, non-repaired prefabricated reinforced concrete was flagged up during the surveys, the mortgage application might be declined.

Other issues which may come up during the surveys, such as the property being built on contaminated land or near a mineshaft, might have an impact but Halifax will likely consider the severity of it on a case-by-case basis after all of the facts have been weighed up.

If you’ve had a mortgage application rejected by Halifax because of issues with the property, there’s no need to panic. Works could potentially be carried out to correct the problem, or the agreement can be re-negotiated with the new valuation data taken on board. Moreover, a broker could help you find a lender with a higher appetite for property-related risk, in which case your mortgage plans won’t need to be placed on the backburner.

6. Something else

There are many other reasons why your Halifax mortgage application might be rejected. Having no credit history, the lender finding evidence of excessive gambling in your financial history, being considered too old for a mortgage or failing to fill out the paperwork correctly are just a few of the other common reasons mortgage applications break down.

If Halifax turned you away for one of these reasons or another that we haven’t listed, the steps to take are exactly the same. Find the right mortgage broker as they will boost your chances of either salvaging your application with Halifax or finding a more appropriate mortgage lender. Remember, being initially turned down by Halifax might end up being a positive in the long run, as the right broker could potentially find you and even better deal.

Important

If you’ve been offered an agreement in principle by Halifax but fear your application could be rejected before completion, it’s not too late to take a pause and seek expert advice. The brokers we work with can tell you if sticking with Halifax is in your best interest and search the market to check whether there’s a more suitable lender out there.

It’s not the end of the road! The expert brokers we work with can help you salvage your homeownership plans.

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What you should do next

If you’ve been turned down for a mortgage by Halifax, here are the steps you should take…

  1. Resist the temptation to re-apply right away
    There’s always the temptation to rush out to another mortgage lender in the hope of a better outcome, but it’s important to hold your horses in the short term. Too many applications for finance in a short space of time can be detrimental to your credit report and might even jeopardise your chances of mortgage success the next time you apply.
  2. Gather the facts surrounding the rejection
    In the meantime, ask your lender exactly what the issue is as this will help you be prepared for it next time, whether that’s during a re-negotiation or a new application with a different lender. If the issue was something that came up during the surveys, ask for a copy of the report. If bad credit was the problem, download all of your credit reports so you can see the issue for yourself.
    If time is of the essence and you don’t have time to wait for a response from your lender, that’s perfectly okay. Simply move on to step three below.
  3. Make an enquiry with us so we can match you with your perfect broker
    Speaking to the right mortgage broker is the best course of action if you’ve had an application rejected by Halifax, or fear that they will turn you down.
    We will match you with a tightly-vetted broker who has the right expertise and experience to turn your rejection into an approval or even find you an alternative lender that will accept you without any hiccups, and maybe even on more favourable terms.
    Whatever needs to happen to get your mortgage over the line, whether that’s a re-negotiation, an appeal or a fresh application with a different lender, using our free broker-matching service will increase your chances of a successful outcome.

Your perfect broker is on hand to help you turn that decline into a mortgage promise

If you’ve had a mortgage offer declined by Halifax, the best course of action is to speak to an expert mortgage broker. They will offer you bespoke advice about what to do next, whether that’s appealing against the lender’s decision or finding a better deal elsewhere.

The right mortgage broker can boost your chances of a positive outcome and help you salvage that homeownership dream. If there’s room to re-negotiate with Halifax and that’s in your best interest, they can thrash out a new agreement without you having to lift a finger. And keep in mind, if the deal isn’t salvageable, your mortgage advisor could track down an even better one elsewhere.

We offer a free broker-matching service which can introduce you to the best mortgage expert for your needs and circumstances. Call 0808 189 2301 or make an enquiry online and we’ll pair you up with a mortgage expert who helps people who’ve been declined by Halifax every day. Maybe that rejection was a blessing in disguise.

FAQs

How long does Halifax take to approve a mortgage?

Halifax state on their own website that a typical mortgage application with them can take up to three months. Their actual processing times can vary depending on how long the conveyancing takes and whether there are any issues surrounding the property seller as well as the buyer’s personal circumstances.

Can I get a Halifax mortgage based on gambling income?

Halifax are likely to reject your mortgage application if the income you’re declaring came from gambling, but there are specialist lenders who offer bespoke mortgages for pro gamblers. See our guide to getting a mortgage if you’re a gambler for more information.

Recreational gambling, meanwhile, is only likely to lead to a mortgage rejection if the lender finds what they think is evidence of excessive betting. Like most mainstream mortgage providers, Halifax is likely to assess this on a case-by-case basis.

Does reaching valuation mean my Halifax mortgage has been approved?

No, but it means you’ve reached an advanced stage in the process if the surveys have come back without any issues. Having your mortgage application declined at this late stage is unlikely since any deal-breaking issues should have been identified by now.

However, a mortgage lender has the legal right to withdraw a mortgage offer at any point up to completion if a major problem comes to light.

Can I appeal if Halifax has rejected my mortgage application?

Yes, if you think you have grounds to appeal against Halifax’s decision to decline your mortgage, you can challenge the rejection by writing to the lender’s underwriting team. Grounds to appeal include the lender basing their decision on incorrect or outdated information, or if you failed to declare capital or assets that are held with another bank or financial institution.

You can increase your chances of lodging a successful appeal by enlisting the services of a mortgage broker and have them do the legwork. They will be able to handle the paperwork this involves, and will know exactly how to negotiate with Halifax.

Do Halifax check your credit report after a mortgage offer?

They might be happy to offer you a mortgage in principle based on a soft credit check, but there will be a more in-depth look at your credit report when the application goes to underwriting. Some mortgages are declined after the AIP stage because a credit problem has been discovered when the underwriting team carries out its hard credit search.

What is Halifax’s credit score pass mark?

Halifax does use credit scoring to assess mortgage applications but doesn’t specify a number that yours needs to be for approval. The lender takes many factors into account when deciding whether you’re creditworthy and you’ll be assessed on a case-by-case basis.

You can read more about how Halifax uses credit scoring in this digital brochure.

How strict are Halifax with mortgages?

All high street mortgage lenders are strict in the sense that they’re likely to reject an application that falls outside of their lending criteria. That said, Halifax have been known to cater for first-time buyers, low income customers and even people with certain credit issues.

One thing to keep in mind, though, is that specialist lenders can be even more flexible than high street ones when it comes to customers who fall into these niche categories.

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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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