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Mortgage Refused
Mortgage Declined? Here Is What To Do Next
Author:Pete Mugleston
Mortgage Advisor, MD
Updated: December 21, 2023
Have you had a mortgage application rejected? No doubt you’re feeling disappointed and frustrated right now, but you’re not alone.
- Declined mortgage applications are actually very common
- Being rejected by one lender doesn’t mean that you won’t have other options.
- With the right advice, it could be possible to salvage your mortgage plans and get a great deal!
So, if you’ve just been declined for a mortgage or you’re worried about having your mortgage application rejected, you’ve come to the right place.
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, there are fallback solutions to help aspiring homeowners reclaim control.
Almost half of the customers we’ve helped onto the property ladder came to us because they had been declined a mortgage and were fearing the worst. Turns out they simply approached the wrong mortgage lender or broker the first time around.
Here are the steps to take 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 go it alone and pick another mortgage lender, there’s no guarantee things will turn out any differently. It’s important before re-applying that you understand the reason why you ere declined before, and a specialist broker can help you to 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 in search of a new lender, take a pause, and get in touch with 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 free broker-matching service, you will be paired with the perfect mortgage advisor for you – an expert we’ve handpicked based on your needs, circ*mstances and the reason your original application was rejected, which will significantly boost your chances of approval.
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Common reasons why a mortgage application would be rejected
The vast majority 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 there are many mortgage providers out there with flexible lending criteria.
Just because you went to your bank and were declined, that doesn’t mean the right mortgage broker can’t find you an alternative lender who’s willing to overlook whatever issue stopped 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 in place. Bad credit isn’t uncommon, but some lenders have a 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
Most mortgage lenders will reject applications where the borrower has less than 10% deposit to put down, some lenders have even higher deposit requirements than this, depending on the circ*mstances. If you’ve been declined because you don’t have enough deposit, remember that the brokers we work with could help you find another lender who’s more lenient with loan-to-value ratios, or even re-apply for your mortgage through a government support scheme.
Arranged or unarranged overdrafts
In the eyes of some mortgage lenders, being in your overdraft is a sign of financial mismanagement. This can include both an arranged overdraft (that your bank has agreed to) or 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, some mortgage lenders might think you’re too much of a risk and reject you outright. This can include anything from playing the lottery to regularly gambling large amounts online. 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 on down the process, even if it had already been accepted. Throughout a mortgage application a mortgage could be declined after the lender has concluded it’s valuation, after it’s been referred to an underwriter or even as late as exchange of contracts.
Here’s more detail about those specific circ*mstances.
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 you’ve had a mortgage declined after the contract exchange and explain how to get your plans back on track as quickly as possible.
Anagreement in principle (AIP) is a tentative deal between you and a mortgage lender that lays out 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 down 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 carry out a valuation of the property to make sure 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, there’s a chance they could 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 who specialises in overcoming that specific 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 who’s willing to approve you the second time around 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 who specialises in overcoming that specific 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 who’s willing to approve you the second time around on an even better deal.
