I've been declined a mortgage - what should I do?
I've been declined a mortgage - what should I do?
Applying for a mortgage can be challenging - so it can be disappointing to go through the process and get turned down. But there are steps you can take to improve your chances of success…
Why might I have been turned down for a mortgage?
A lender looks at the value of the property you want to buy, the deposit you’ve saved up and your general financial situation before coming to a decision on your mortgage application. Ultimately, it comes down to the question of whether the lender thinks you can afford the repayments.
Alongside your income, some other reasons why you’ve been turned down for a mortgage may include:
- Insufficient time spent in your current job
- You don’t have sufficient evidence to support your application, such as several months’ bank statements
- You’ve only recently moved to your current address
- You’re not registered on the electoral roll.
Try not to get too disheartened if you’re refused a mortgage. Because every lender has their own criteria, you could still find one who will offer you a mortgage.
How can I help my chances of getting a mortgage?
Once you know the reasons why your application was turned down, you can take steps to improve your chances of getting a mortgage by:
- Improving your credit score – each of the three main credit agencies (Experian, Equifax and TransUnion) can provide you with detailed information on your credit file, free of charge. You can make improvements to your credit score by paying off existing debts, paying your bills on time and closing any credit card accounts you don’t use. And avoid making multiple applications for credit in a short period of time, as this signals to potential borrowers that you may be struggling with your finances.
- Continuing to save for a deposit – having a larger deposit means you should be able to access more mortgage deals, including ones with lower interest rates. Typically, the minimum deposit you’ll need is 5% of the property’s value.
- Considering a guarantor mortgage – you could find a close relative (for example, a parent) to guarantee the loan and be responsible for the repayments if you fall behind. Guarantor mortgages differ from lender to lender, so it may be worth getting advice from a mortgage broker to see if this could be a serious option for you.
What other steps should I consider?
Once you’ve taken these steps, consider speaking to a mortgage broker who can advise you on whether you’re in a better position to apply for another mortgage. You could also use our mortgage eligibility checker – this tool can give you an indication of how likely you are to be offered a mortgage. It won’t affect your credit score to use this helpful tool.
