What To Do If Halifax Has Refused Your Mortgage
A declined Halifax mortgage application doesn’t have to mean the end of your dreams of owning a home. Find out how a broker can get your mortgage aspirations back on track.
Firstly, have you had a mortgage declined in the last 12 months?
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In this article, we’ll explain what steps you can take if Halifax has rejected your mortgage application, highlight the most common reasons why this may have happened and how a broker can help you get the borrowing you need.
How strict are Halifax as a mortgage lender?
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 is 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, and the best way to find one is by using the services of a mortgage broker.
How long does Halifax take to approve a mortgage?
Halifax states 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.
What to do if Halifax has declined you for a mortgage
If you’ve been turned down for a mortgage by Halifax, here are the steps you should take…
- 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 that could, potentially, make matters worse – particularly if you’re not sure why this has happened. 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.
- Gather the facts surrounding the rejection
The first thing to do is ask your lender exactly what the issue is as this will help you prepare next time around, whether that’s during a re-negotiation or a new application with a different lender. If the issue came up during the surveys, ask for a copy of the report. If bad credit was the problem, download your credit reports to see the issue for yourself.
- 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 broker who has the right expertise and experience to turn your rejection into approval or even find you an alternative lender that will accept you, possibly 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 – make an enquiry to speak to an expert today.
Can you appeal the decision?
Yes, you can challenge a rejection by writing to the lender’s underwriting team. Grounds to appeal include Halifax 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 having them do the legwork. They will be able to handle the paperwork this involves and will know exactly how to negotiate with Halifax.
Get expert advice immediately if…
- You have 10% deposit or less
- You have some form of bad credit
- You are self-employed with just one year’s accounts
- You want to borrow more than 4.5x your salary
- You’re purchasing a non-standard property
- You are classed as having a higher appetite for risk eg: gambling
Get advice from a declined mortgage expert
Common reasons Halifax decline mortgages applications
You may have been offered an agreement in principle (AIP) by Halifax only to be declined on full application due to bad credit. This is because they’ll often consider granting an AIP after carrying out their initial checks and a soft credit search. But during underwriting, a hard credit check takes place and the full extent of any credit problems will come to light.
Halifax does sometimes consider offering mortgages to customers with most types of bad credit. However, depending on the severity of the issues, they have been known to reject borrowers with CCJs, IVAs, mortgage arrears and even discharged bankruptcies.
Newly self-employed applicants
If you recently became 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 evidence of at least 12 months of trading before they can be considered for a mortgage. In fact, they prefer customers with at least two years of accounts.
For most residential mortgage borrowers, Halifax caps their lending at 4.5 times annual income (they can go up to 5.5 times for incomes over £125,000 per annum and borrowing up to 85% loan-to-value).
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 needed 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.
A problem with the property
Any property issues detected during the surveyor checks could give rise to your application being rejected outright.
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.
There are many other reasons why your Halifax mortgage application might be rejected, such as:
- Having no credit history
- You’re applying through a ‘Buy for University’ scheme
- Using an income projection as your latest year’s accounts if you’re self-employed
- Evidence of excessive gambling in your financial history
- Submitting a mortgage application with a guarantor
- You’re looking to let out a room in the property via Airbnb or similar
- You will be over 80 years old at the end of the proposed mortgage term
- The source of your deposit is a loan from a member of your family
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 approval. And 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 an even better deal.
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How long does it take to re-apply for a mortgage?
This all depends on the reasons why you’ve been declined – this is why it’s most important to establish these facts first before re-applying with a new lender. If, for example, you have adverse credit on your record this may take anywhere up to a matter of weeks or, in the most extreme cases, possibly years to resolve.
Once you know why you’re application was declined you can then take steps to resolve these issues thoroughly. When this has been done, with the help of a mortgage broker, your new application should hopefully take as long as is standard (see above) to process and get the approval you need.
How Online Mortgage Advisor can help
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 do this on your behalf.
We offer a free broker-matching service that will 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 with previous experience in this area.
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Halifax said they wouldn't touch me
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Halifax is 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 dedicated article on 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.
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.
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.
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.