Mortgage Declined? Here Is What To Do Next

Have you had a mortgage application rejected? You’re probably feeling disappointed and frustrated right now, but you’re not alone.

• Declined mortgage applications are very common.
• Being rejected by one lender doesn’t mean you won’t have other options.
• With the right advice, it could be possible to get approved.

So, if you’ve just been declined for a mortgage or are worried about having your mortgage application rejected, you’ve come to the right place.

In this guide, we’ll explain why mortgage applications get declined, what steps you can take next, and how a broker can help improve your chances of approval. If credit issues are impacting your application, you may also find our bad credit mortgages page helpful.

For our full range of articles on this topic, visit our mortgage refused page.

Mortgage application declined? Here’s what to do next…

We want to reassure you that mortgage rejections happen all the time for all kinds of reasons, and in many cases, fallback solutions exist to help aspiring homeowners reclaim control.

We’ve helped plenty of customers onto the property ladder who came to us because they had been declined a mortgage and feared the worst. It turns out they simply approached the wrong mortgage lender or broker the first time.

Here are the steps to boost your chances of turning that rejection into an approval…

1. Resist the temptation to re-apply straight away

You could be forgiven for rushing out to search for alternative lender, it’s natural to want a quick fix, but this is a temptation you should resist at all costs, since re-applying so soon is never a good idea.

If you do it alone and pick another mortgage lender, there’s no guarantee things will turn out differently. It’s important to understand the reason why you were declined before re-applying, and a specialist broker can help you understand that.

2. Think about your credit report

A big consideration when re-applying again is the impact this can have on your credit report – too many requests for finance in a short space of time can raise a red flag to lenders, putting future applications at risk.

Rather than rush out to find a new lender, pause and contact us. We’ll make sure you get the right advice to boost your chances of reviving those mortgage plans.

Head to our credit reports hub to find out how to download your credit reports for free.

3. Get the right advice

If you’ve been declined for a mortgage, you don’t want to speak to a random broker or even the same broker – you need an advisor who specialises in securing mortgage approvals after rejection. They have the expertise you need to reclaim control of your plans and have long-standing working relationships with the lenders best positioned to approve you.

By using our broker-matching service, you will be paired with the perfect mortgage advisor for you – an expert we’ve handpicked based on your needs, circumstances and the reason your original application was rejected, which will significantly boost your chances of approval.

Common reasons why a mortgage application would be rejected

Most of the time, mortgage applications are rejected because the applicant approached the wrong lender or was given bad advice by the wrong broker. The market is vast, and many mortgage providers have flexible lending criteria. 

Just because you went to your bank and were declined doesn’t mean the right mortgage broker can’t find you an alternative lender willing to overlook whatever issue stops you from getting the mortgage you want the first time around. 

Here are some of the most common reasons that mortgage applications are declined…

Income and affordability issues

Some aspiring homeowners are declined for a mortgage because they either don’t earn enough or have a complex income type that the lender they used didn’t understand. You can find out more specifically about being declined on affordability.

Bad credit or failing credit report checks

Some mortgage lenders decline customers with bad credit on the spot, while others will only consider approving them with caveats. Bad credit isn’t uncommon, but some lenders have much stricter criteria than others, so it’s important to find a lender who’d be willing to set aside any bad credit issues. 

Deposit requirements

The smaller your deposit, the higher your loan-to-value ratio (LTV) will be. This means your perceived risk will be higher with certain lenders, but some lenders are more comfortable lending to you if you have a small deposit.

A specialist broker will be able to identify those lenders, give you a rough estimate of the deposit you’ll need, or help you re-apply through a government support scheme.

Arranged or unarranged overdrafts

If you’re in an overdraft, this shouldn’t be an issue for most lenders as long as you’re coming out of it each month when you’re paid. Most lenders will be fine with an arranged overdraft (your bank has agreed to), but you might experience more problems if you have an unarranged overdraft (where you have overspent on your account past a limit the bank has agreed to).

If you have been rejected by one of these lenders, we’ve got good news: there are brokers in our network who specialise in salvaging mortgage applications that have stalled due to the customer’s overdraft.

A history of gambling

If you have a history of gambling, most lenders will be fine with this as long as it’s affordable gambling. If your gambling is unaffordable, your gambling more than you earn for example, lenders will likely be less inclined to lend to you.

If this has happened to you, keep in mind that the advisors we work with have deep relationships with lenders who have a higher appetite for risk than most – high enough to offer lifelines to customers who’ve been declined due to a history of gambling.

It’s also not impossible for a lender to decline an application further down the process, even if it has already been accepted. Throughout a mortgage application, a mortgage could be declined after the lender has concluded its valuation, been referred to an underwriter, or even as late as the exchange of contracts.

Here’s more detail about those specific circumstances.

Declined after contract exchange

We understand that hitting a snag so close to completion can be frustrating and upsetting, not to mention stressful, but don’t for a second think that you’re out of options. In this guide, we’ll tell you exactly what to do if your mortgage declined after the contract exchange and explain how to get your plans back on track as quickly as possible.

An agreement in principle (AIP) is a tentative deal between you and a mortgage lender that shows how much they’d be willing to let you borrow. Many AIP applications go through without a hitch, while others are rejected, and some people even find that they’re offered an agreement in principle, only to be declined later on.

If you’ve been declined after an agreement in principle or have had an AIP rejected, here’s what to do if your mortgage application has fallen at either of these stages, why this can happen and where to get the right advice if it has.

Declined at valuation

During a mortgage application, lenders appoint a surveyor to conduct a valuation of the property to ensure it’s worth the amount you’re paying and check whether there are structural or build issues.

If they don’t like what they read in the report, they may decline your application based on the valuation.

Declined by the underwriter

Underwriters can decline an application for reasons including bad credit and application discrepancies, but the right mortgage broker could help you overcome these issues.

These are merely a handful of the issues the mortgage advisors we work with can help you bounce back from. If your mortgage application has been rejected for any other reason, we can match you with an advisor specialising in overcoming that problem.

Having a handpicked expert in your corner will dramatically improve your chances of successfully renegotiating with a lender who has rejected you or even finding a new lender willing to approve you the second time on an even better deal.

Been declined for another reason? We can still help you out…

The above are merely a handful of the issues the mortgage advisors we work with can help you bounce back from. If your mortgage application has been rejected for any other reason, we can match you with an advisor specialising in overcoming that problem.

Having a handpicked expert in your corner will dramatically improve your chances of successfully renegotiating with a lender who has rejected you or even finding a new lender willing to approve you the second time on an even better deal.