A mortgage application being declined can be frustrating, particularly when the reason is not immediately clear. However, one lender’s decision does not necessarily mean that every lender will reach the same conclusion.
Different lenders use different affordability calculations, credit policies and property criteria. Before making another application, it is important to understand what caused the decline and whether anything needs to be corrected or improved.
What to do after your mortgage has been declined
Avoid immediately submitting applications to several other lenders. Multiple applications may result in additional credit searches without addressing the reason for the original decision.
Instead, consider taking the following steps:
- Ask the lender or mortgage adviser whether they can explain the reason for the decision.
- Check that the information supplied in the application was accurate and complete.
- Review your credit reports for errors, unfamiliar accounts or outdated information.
- Check whether your income and financial commitments were recorded correctly.
- Establish whether the issue concerned you, the lender’s criteria or the property itself.
- Speak to an FCA-regulated mortgage adviser before making another application.
Was an Agreement in Principle or a full application declined?
The stage at which the application was declined can help identify what may have happened.
Agreement in Principle declined
An Agreement in Principle, sometimes called a Decision in Principle, is an initial assessment based on information about your income, commitments and credit history. A decline at this stage may relate to affordability, credit information or the lender’s eligibility criteria.
An Agreement in Principle is not a mortgage offer and does not guarantee that a full application will be approved.
Full mortgage application declined
A full application involves more detailed checks. These may include verification of income and expenditure, supporting documents, a full credit assessment and a valuation of the property.
A full application could therefore be declined even where an Agreement in Principle was previously issued.
Common reasons mortgage applications are declined
Mortgage applications can be declined for many different reasons. Sometimes a single issue is responsible, while in other cases several factors affect the lender’s decision.
Credit history or recent financial conduct
Lenders normally review your credit history and how you have managed financial commitments. Factors that may affect an application include:
- Missed or late payments
- Defaults or County Court Judgments
- Mortgage or secured-loan arrears
- Debt management plans, IVAs or previous bankruptcy
- High balances or extensive use of available credit
- Recent payday-loan use
- Several recent credit applications
The effect of an issue can depend on its type, value, age, settlement status and the rest of your financial circumstances.
Affordability concerns
Lenders assess whether the proposed mortgage appears affordable now and under their own assumptions about future costs or interest rates.
The assessment may take account of:
- Employment and self-employed income
- Loans, credit cards and other borrowing
- Childcare, maintenance and regular household expenditure
- Dependants
- The proposed mortgage term
- The lender’s own affordability calculation
A mortgage may be affordable according to one lender’s calculation but not another’s.
Income could not be verified
A lender may be unable to accept some or all of the income included in an application. This can affect applicants with overtime, commission, bonuses, benefits, contracting income or more complex self-employed earnings.
Applications may also encounter difficulties where payslips, bank statements, accounts, tax documents or other supporting evidence do not match the figures supplied.
Information was inconsistent or incomplete
Differences between the application, credit report, bank statements and supporting documents may require further explanation. Even an innocent error can delay an assessment or affect the outcome.
Common examples include an incorrect address history, undisclosed borrowing, inconsistent income figures or missing documentation.
The deposit did not meet the lender’s requirements
The deposit required will depend on the property, mortgage type, credit profile and lender criteria. A lender may also need evidence showing where the deposit came from.
Gifted deposits, overseas funds and money originating from the sale of another asset may require additional documentation.
The property was unsuitable
Sometimes the applicant is acceptable but the property is not suitable for that particular lender.
Potential issues can include:
- The valuation being lower than the agreed purchase price
- Structural defects or extensive repair work
- Unusual or non-standard construction
- A short lease
- Planning or building-regulation concerns
- Restrictions affecting resale or future demand
- The property type or location falling outside the lender’s policy
The application did not meet the lender’s criteria
Every lender decides which applications it is prepared to consider. Criteria can cover employment type, income evidence, credit history, property construction, deposit source, age, mortgage term and many other factors.
A decline can therefore reflect a mismatch with one lender’s policy rather than a conclusion that no mortgage is available.
Does a mortgage decline affect your credit score?
The lender’s decision itself is not normally recorded on your credit report as a “decline”. However, a credit search made during the application may appear on your report.
Making several applications within a short period can result in multiple searches. This is one reason to understand the original decision before approaching another lender.
Checking your own credit report does not normally leave the same type of visible search as a credit application.
Can you apply for another mortgage after being declined?
Potentially, yes. The appropriate next step will depend on why the application was declined.
If the application contained an error or was submitted to a lender whose criteria did not fit the circumstances, another carefully considered application may be possible. Where the problem concerns recent credit issues, affordability or missing evidence, it may be better to address that issue before applying again.
An FCA-regulated mortgage adviser can assess your circumstances and advise whether another application is appropriate.
How to improve your position before applying again
The actions that may help will depend on the cause of the decline. They can include:
- Checking your credit reports and correcting inaccurate information
- Registering to vote at your current address where eligible
- Paying commitments on time
- Reducing credit-card balances or other unsecured borrowing
- Avoiding unnecessary new credit applications
- Ensuring your address history is consistent
- Keeping evidence of income and the source of your deposit
- Reviewing regular expenditure and unused financial commitments
- Waiting for a more suitable period where a recent credit issue is the cause
These steps cannot guarantee approval, but they may help present a clearer and more accurate application.
How Mortgage Bridge can help
Mortgage Bridge provides general information and acts as a mortgage introducer. We do not provide regulated mortgage advice, recommend lenders or decide whether an application will be accepted.
Where appropriate, we can introduce you to an FCA-regulated mortgage adviser. The adviser can review your circumstances, help establish why an application may have been declined and provide regulated advice about any suitable next steps.
Frequently asked questions
Does one mortgage decline mean every lender will decline me?
No. Lenders use different affordability calculations and acceptance criteria. However, it is sensible to understand the original decision before making another application.
Should I apply to another lender immediately?
Not necessarily. Applying again without identifying the problem could produce the same outcome and another credit search. Consider checking the application, your credit reports and the lender’s explanation first.
Can a mortgage be declined after an Agreement in Principle?
Yes. An Agreement in Principle is only an initial assessment. A full application involves further checks, including verification of information and an assessment of the property.
Can a lender change its decision?
In some circumstances, a lender may reconsider an application if information was missing or incorrect. This depends on the lender, the reason for the decision and whether further evidence is available.
What if the property caused the decline?
The lender or valuation report may provide more information. Depending on the issue, possible next steps could include obtaining further reports, renegotiating the purchase or considering a different property. Regulated advice should be obtained before deciding how to proceed.
How long should I wait before applying again?
There is no single waiting period that applies to every case. It will depend on the reason for the decline, your current circumstances and the criteria of any future lender.
Next steps
If your mortgage application has been declined, the first priority is to understand why. You can then decide whether information needs correcting, your circumstances need time to improve or a different approach may be appropriate.
Start a mortgage enquiry and, where appropriate, Mortgage Bridge can introduce you to an FCA-regulated mortgage adviser.
Important information: Mortgage Bridge provides general information and acts as a mortgage introducer. We do not provide regulated mortgage advice. All mortgages are subject to status, affordability, lender criteria and assessment.
As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.
Important information: Mortgage Bridge provides information only and acts as a mortgage introducer. We do not provide mortgage advice or make lender recommendations. We can introduce you to an FCA-regulated mortgage adviser who can provide personalised mortgage advice.