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What to do if…the bank has rejected your mortgage application


If your mortgage application has been declined after you have got your hopes up about owning a home you may be feeling upset, let down, and ready to apply somewhere else immediately. Even if you are desperate to move into a new home, don’t rush off and apply to another lender straight away, as doing so could negatively affect your credit file. First, try and find out the reason why your mortgage was rejected, as different reasons will require different solutions.

Do you have a poor credit score?

All lenders will check your credit file to see how you have coped with paying debt in the past. If you think you might have a poor credit score, check your score online with services like Experian and CallCredit. If any of the information is wrong, you can request for it to be changed and then contact your bank. If you have a poor credit score, you will need to work on improving it before you can get a mortgage or a mortgage with a decent interest rate.

Do you have lots of debt?

If you have lots of debt a lender might be unwilling to give you a mortgage as they may believe you are financially stretching yourself. Also, if you have had a large amount of payday loans in the past, even if you have always paid them on time, you may find it harder to get a mortgage.
Try to take some time out to work out your monthly budget. Is there any way you can reduce your spends and concentrate more on paying your debts? Try an online Budget Planner to see how much money a month you could be wasting.

Are you registered to vote?

Mortgage lenders will use the electoral register to check if you are registered to your current address and confirm if you are who you say you are. If you are not registered to vote you will not be on the electoral register, and this small, easily fixable thing could be the only reason your mortgage application was rejected. Visit About My Voteto register.

Are you earning enough to pay for your mortgage?

No matter how good you are with your money, a lender might think that you are not earning enough to get the size of the mortgage you want. To combat this, you could ask for a smaller mortgage, or see if you qualify for a home buying scheme for people on smaller incomes.

How big is your deposit?

They average first time buyer puts down a deposit of 20% on their first house. With a Help to Buy scheme you can go as low as 5%, but many lenders will only accept 20% or more. Look at the size of your deposit and try to think if you can save any more money. This way, you will be more likely to be accepted for the type of mortgage you want and you may get a lower interest rate.

How long have you lived in the UK?

Many lenders are reluctant to approve mortgages for people who have been living in the UK for less than three years. For lenders that will, you will need to show your employment contract and a visa, which proves you have permission to live and work in the UK.

None of these apply?

If you think you have a large deposit, good credit history, are on the electoral role and are earning enough for the mortgage you wanted, there are many different reasons why you still might not be able to get a mortgage. Some lenders prefer to lend to a certain demographic, which you might not fit in to. Your mortgage may have been rejected based on the type of home you are looking to buy, or there may have simply been some kind of administrative errors or a mistake made by the lender.

What to do next?

If you can not figure out why you have been rejected and would like to find out, you can arrange an interview with your provider. If you know the reason but would like to keep on applying, we recommend that you speak to a professional mortgage broker or independent financial adviser. This way, you will be exposed to a wide range of lenders and they will be able to speak to them on your behalf.

Independent Financial Adviser, Andrew Gurton, said:
“Applying for a mortgage can be a long and complicated process, for both the applicant and the lender. Don’t be disheartened if your application has been rejected, it could be for a number of reasons, and does not always mean that you won’t be able to get a mortgage.

“Speak to a financial adviser after your first application and they may be able to tell you where you went wrong. They will also have knowledge of and access to many different types of mortgage providers and will be able to guide you in the right direction.”

Please give us a call on 0800 092 1245 or ask us a question online if you would like to speak to someone about applying for your mortgage, or have a look at our mortgage calculator to work out how much interest you would have to on a mortgage you are offered.

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