Key takeaways:
- Yes, you may still be able to get a mortgage after being declined.
- Most mortgage applications are declined because of credit history, affordability, property valuation or lender criteria.
- Different lenders have different lending criteria, so one decline does not necessarily mean every lender will say no.
- Avoid making multiple mortgage applications before understanding why your application was declined.
- A whole-of-market mortgage adviser can help you explore alternative lenders and create a plan based on your personal circumstances.
Can I still get a mortgage if my application has been declined?
Yes, you may still be able to get a mortgage. A declined mortgage application does not automatically mean you cannot get a mortgage, but your next steps will vary depending on:
- Why your application was declined.
- Whether the issue can be resolved.
- How long it will take to resolve the issue.
- If an alternative lender may be more suitable.
Will Crane, Mortgage and Protection Adviser, says:
“One of the biggest misconceptions I see is people assuming that a declined mortgage application means they can’t buy a home. In reality, the first thing we need to understand is why the lender declined it. Once we know that, we can usually start looking at other options, whether that’s another lender, improving your credit profile or waiting until the timing is right.”
Why was my mortgage application declined?
Mortgage applications are typically declined for one of four reasons:
- The property’s valuation.
- The lender’s criteria.
Although receiving a declined application can feel disheartening, it is important to remember that not every lender assesses applications in the same way. Each lender has its own lending criteria, affordability models and approach to risk, meaning one lender’s decision does not necessarily reflect what another lender may decide.
| Reason | What does it mean? | Possible next steps |
| Credit history | Your credit report may contain missed payments, defaults, CCJs, IVAs or other adverse credit that falls outside a lender’s criteria. | Review your credit report to understand what is affecting your application. Some issues may be corrected, such as inaccurate information or historic accounts that were not closed properly. Depending on the type and age of the issue, a specialist lender may also be an option. |
| Affordability | The lender does not believe the mortgage is affordable based on your income, expenditure or financial commitments. | Review your income, outgoings and existing commitments to understand what may have affected the assessment. Another lender may have a different affordability model, or improving your financial position could strengthen a future application. |
| Property valuation | The lender’s surveyor has identified concerns about the property’s value or condition. | Understand the cause for concern (e.g. flood risks or structural issues) as this may help determine whether another lender or property is the best next step. |
| Lender criteria | Your circumstances or the property does not meet that lender’s specific lending policy. | Consider other lenders, as criteria vary significantly across the market. A whole-of-market adviser can help identify lenders whose requirements better match your circumstances before submitting another application. |
The good news is that a mortgage decline does not automatically mean you cannot buy a home. Depending on the reason, there may be another route available, whether that involves finding a lender with more suitable criteria, resolving an issue with your credit profile or taking time to strengthen your financial position.
Will explains:
“Every mortgage decline is different, which is why it’s so important to understand why it happened. A valuation issue has a very different solution to a credit issue, and a lender declining an application doesn’t necessarily mean every lender will reach the same decision. Sometimes it’s simply a case of finding the lender whose criteria best matches the client and the property.”
My mortgage was declined for bad credit. What do I do now?
Adverse credit can affect your ability to get a mortgage, but the impact will depend on the type of issue, how long ago it happened, the amount involved and the lender’s criteria.
Adverse credit can include:
- Missed payments.
- Defaults.
- County Court Judgments (CCJs).
- Individual Voluntary Arrangements (IVAs).
- Debt management plans.
Not all credit issues are viewed in the same way. A single historic missed payment may be assessed differently to more serious issues such as multiple defaults, CCJs or a Debt Management Plan.
Some adverse credit can remain on your credit report for up to six years from the date of the issue. This means that, depending on the circumstances, the best route may not always be applying with another lender straight away. Instead, it may involve improving your financial position, maintaining good payment habits and allowing time for historic issues to become less of a barrier.
Before applying again, it can be useful to check your credit report carefully. Some applicants discover historic issues they were unaware of, such as unpaid utility accounts from previous properties or shared accommodation.
These issues may sometimes be resolved by contacting the provider, particularly where accounts were not closed correctly or information is inaccurate.
Will says:
“With more serious credit issues, it can sometimes be about timing. You might not be able to get the mortgage you want today, but that doesn’t mean you won’t be able to in the future. If you spend a few years building a strong payment history and keeping your finances in good order, you can put yourself in a much stronger position when you apply again.”
What should I do if my mortgage has been declined?
Try not to panic or rush into another mortgage application. Instead, find out why your application was declined and speak to a mortgage adviser before taking your next step.
A declined application can be frustrating, but making multiple applications without understanding the reason could make things worse, particularly if each application results in another hard credit search.
Instead, consider the following steps:
- Find out why your application was declined.
Ask your lender or mortgage adviser to explain why your application was not successful. Whether the issue relates to your credit history, affordability, the property’s valuation or the lender’s criteria will determine the most appropriate next steps.
- Check your credit report.
If your application was declined because of your credit history, review your credit report carefully for missed payments, defaults or errors that could be affecting your application. In some cases, issues such as historic utility accounts or incorrect information may be resolved by contacting the provider, while other credit issues may simply need time to improve.
- Avoid making multiple applications.
Most full mortgage applications leave a hard search on your credit file, and several applications in a short period may raise concerns for future lenders. Therefore, while it can be tempting to apply with another lender straight away, doing so without understanding why you were declined could reduce your chances of success.
- Speak to a whole-of-market mortgage adviser.
A whole-of-market mortgage adviser can assess your circumstances, explain why your application may have been declined and identify lenders whose criteria are better suited to your situation. This can help reduce unnecessary applications and improve the likelihood of finding a suitable mortgage.
- Create a plan.
If your credit history needs improving or your financial circumstances need time to change, having a clear plan can put you in a much stronger position when you apply again. Depending on your circumstances, this could involve improving your credit profile, reducing existing borrowing, increasing your deposit or simply waiting until you are eligible for a wider range of lenders.
Will Crane says:
“One thing I always tell clients is that just because it’s a no today doesn’t mean it’s a no forever. Sometimes we can find another lender straight away. Other times, it’s about putting a plan in place so you’re in a much stronger position in a year or two.”
Frequently asked questions
- Can I get a mortgage with bad credit?
Potentially, yes. Some specialist lenders consider applicants with historic credit issues, although you may have fewer options and could pay a higher interest rate than someone with a stronger credit profile.
- Can I get a mortgage after a mortgage valuation was declined?
Potentially, yes. A declined valuation does not always mean the property cannot be mortgaged. Different lenders may take different approaches when assessing a property and its suitability as security for the loan.
- Can I get a mortgage if my application was declined because of affordability?
Potentially. Some lenders assess affordability differently, so another lender may be willing to lend. If your circumstances need to improve first, a mortgage adviser can help you create a plan before applying again.
- Will a declined mortgage affect my credit score?
A declined mortgage itself does not usually affect your credit score. However, most full mortgage applications leave a hard search on your credit file, and making several applications in a short period may affect how future lenders assess your application.
- How long should I wait after a mortgage decline?
There is not a set timeframe. If the decline relates to lender criteria or a property valuation, another lender may be an option straight away. If it is due to your credit history or affordability, improving your financial position first may give you a better chance of success on your next application.
How can Cooper Associates Mortgages help?
Having your mortgage application declined can feel like a setback, but it does not always mean your homeownership plans have come to an end.
Whether your application was declined because of your credit history, affordability, the property’s valuation or lender criteria, understanding the reason is the first step towards finding the right solution.
Our award-winning mortgage advisers have access to a wide range of lenders and can help assess your circumstances, explain your options and, where possible, identify an alternative route to securing a mortgage.
If your mortgage has been declined and you would like to discuss your options, get in touch with our team today for a fee-free, no-obligation meeting. We are here to help.
