Being told no by a mortgage lender is stressful, especially when you have an offer accepted on a home or a fixed rate about to end. But a declined mortgage application is often a decision by one lender, based on one lender's rules, rather than a verdict on whether you can get a mortgage at all. With over 100 mortgage lenders in the UK, each with its own criteria, the right lender for your circumstances may still say yes.
Key takeaway: If your mortgage has been declined, avoid rushing straight into another application. Find out why it happened, check your credit report, then speak to a mortgage broker at Quanstrom Financial before you apply again. Many declines come down to the application going to a lender whose criteria simply did not fit, not to you being unmortgageable.
[[stats: 100+=UK mortgage lenders, each with its own criteria | 4.5x-6.5x=Typical income multiples, depending on the lender | Whole of market=Access to lenders in one place]]
Mortgage declined? It may not be a hard no
Every lender sets its own rules on credit history, income, employment and the types of property it is happy to lend on. A high street bank might decline an application that a different high street bank, or a specialist lender, would be comfortable with. That is why "computer says no" from your own bank, or from a lender chosen without looking at the wider market, is not necessarily the end of the road.
The important thing is to understand what went wrong before you try again, because each new application leaves a footprint on your credit file. Applying blind to lender after lender can make the next decision harder rather than easier.
Why was my mortgage application declined?
Lenders do not always explain their reasons in detail, but most declines fall into a handful of categories. Here is how they tend to play out:
[[table: Reason | What it usually means | Could another lender say yes? ;; Credit history | Something on your credit file fell outside that lender's scoring or criteria | Often, depending on what the issue is and how recent ;; Income and affordability | The lender would not lend the amount you need on your income | Often, as income multiples and the way income is counted vary widely ;; Type of income | Self-employed, bonus, overtime, contract or new-job income was not accepted, or only partly counted | Often, as some lenders specialise in these ;; The property | The lender was not comfortable with the property itself, or valued it lower than the price | Sometimes, depending on whether the issue is that lender's appetite or the property ;; Paperwork and errors | Details did not match, documents were missing, or you were not on the electoral roll | Usually, once the issue is fixed]]
Declined for a mortgage because of your credit score?
There is no single credit score that every lender uses. The score you see on a credit-checking app is a guide, not the number a lender works from. Each lender reviews your credit report and applies its own scoring and its own rules, so the same credit history can be declined by one lender and accepted by another.
Lenders differ on things like how many missed payments they will accept, how long ago a default or CCJ needs to be, whether it has been settled, and how much of your available credit you are using. Some mainstream lenders can be more flexible than people expect with small, older, settled issues, while specialist lenders are set up to look past more recent or more serious credit problems.
Sometimes the problem is not a credit issue at all. Not being registered on the electoral roll, an address that does not match your credit report, or several recent credit applications can all count against you. These are often quick to fix.
If you know there are issues on your file, our guide to adverse credit mortgages explains what lenders look at, and our credit score guide covers how to give your file the best chance.
Declined for a mortgage because your income isn't high enough?
Lenders typically lend somewhere between around 4.5 and 6.5 times your income, depending on your circumstances, and different lenders sit at different points in that range. Being declined for the amount you asked for by one lender does not necessarily mean every lender will see it the same way.
Example: On an income of £50,000, a lender working at 4.5 times income might lend up to £225,000, while a lender able to go to 6.5 times might consider up to £325,000. That is a difference of £100,000 on the same income, purely down to which lender the application went to. Figures are illustrative only, and any lending is subject to the lender's affordability assessment and criteria.
How your income is counted matters just as much as the multiple. Lenders treat overtime, bonuses, commission, self-employed profits and contract income very differently. Some count 100% of overtime, others only half, and some average it over three months while others want a full year. If part of your income was ignored or discounted, another lender might be able to use more of it.
You can get a rough idea of how different multiples affect your borrowing below.
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For more on how lenders work out what you could borrow, see our guide on how much you can borrow for a mortgage. If you are self-employed, our self-employed mortgage guide explains how lenders assess your accounts, and if you have recently changed roles, see getting a mortgage with a new job.
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Mortgage declined because of the property?
Sometimes your finances are fine and it is the property the lender is not comfortable with. The key question is whether the property is genuinely unmortgageable, or whether it simply falls outside the appetite of the lender you applied to.
Lenders vary a lot on properties that are less standard, such as flats above shops or commercial premises, homes of non-standard construction, properties with short leases, or homes with issues flagged in the valuation. One lender may decline outright while another is willing to consider the same property, sometimes with conditions or a larger deposit.
A property may be genuinely difficult to mortgage if it is not currently habitable, for example with no working kitchen or bathroom, or if it has significant structural problems. In those cases the options may be more limited and depend on your circumstances.
Good to know: A down valuation, where the lender's surveyor values the property below the agreed price, is not the same as a decline. The lender may still offer a mortgage, but based on the lower value, which means you would need to cover the gap. Options can include renegotiating the price with the seller, adding to your deposit, or, in some cases, another lender's valuation.
If you are buying a new build, our new build mortgage guide covers the extra criteria lenders often apply.
What to do after your mortgage is declined
The steps you take in the next few days can make a real difference to your next application.
[[steps: Pause before applying again|Firing off applications to several lenders can leave a trail of hard searches on your credit file, which may make lenders more cautious. ;; Find out why|Ask the lender or whoever arranged the application for the reason. Lenders are not always able to give full detail, but any pointer helps. ;; Check your credit report|Look at your report with the main credit reference agencies for errors, old addresses, missed payments you were not aware of or anything that does not belong to you. ;; Fix the quick wins|Register on the electoral roll, correct any errors and avoid applying for new credit while you plan your next step. ;; Speak to a mortgage broker before the next application|A mortgage broker at Quanstrom Financial can match your circumstances against lender criteria before an application is made, rather than finding out the hard way.]]
How Quanstrom Financial can help after a decline
Quanstrom Financial is a whole-of-market mortgage broker, so rather than being limited to one bank's rules, our advisers can look across the market for lenders whose criteria suit your credit history, income and property. The real value is not just access to lenders, but knowing which ones are most likely to be comfortable with your situation before your application goes in.
We help clients across Eastbourne, East Sussex and nationwide, in the office, by phone or by video call. If you have been declined, whether by your own bank or after going direct, it may well be worth a second look. You can read more about what a mortgage broker does, or book a free initial consultation and we will talk through what happened and what your options could be.
Frequently asked questions
Does a declined mortgage application affect my credit score?
The decline itself is not recorded on your credit report, but the hard search the lender carried out when you applied is. One hard search is unlikely to cause problems on its own, but several applications in a short space of time can make lenders more cautious, which is why it is worth getting advice before applying again.
How long should I wait to reapply after a mortgage is declined?
There is no fixed waiting period. If you were declined because of a fixable issue, such as an error on your credit report or not being on the electoral roll, you may be able to reapply soon after it is resolved. If the decline was down to a lender's criteria rather than your circumstances, a more suitable lender may be able to consider you without a long wait. A mortgage broker at Quanstrom Financial can help you decide on the right timing.
Will the next lender know I have been declined?
Your credit report shows that a lender searched your file, but not whether your application was accepted or declined. A new lender may see recent searches, which is another reason to avoid making lots of applications in quick succession.
Why was my mortgage declined after an agreement in principle?
An agreement in principle, sometimes called a decision in principle, is usually based on a quick credit check and the information you provide at that stage. The full application goes further, with underwriters checking your documents, your full credit report and the property valuation. Differences in income evidence, new information on your credit file or an issue with the property can all lead to a decline at this later stage.
Do lenders have to tell you why your mortgage was declined?
Lenders often give limited detail about why an application was declined, particularly where their own credit scoring is involved. It is still worth asking, and checking your credit report yourself can help identify anything that may have caused the decision.
Can I still get a mortgage if my bank has said no?
You may be able to. Your bank is one lender with one set of criteria, and other high street or specialist lenders may view the same application differently. A whole-of-market mortgage broker at Quanstrom Financial can compare your circumstances against a wide range of lenders, subject to criteria.
I have been declined by more than one lender. Is it worth trying again?
It can be, but it is important to stop and understand the reasons first rather than making another application. Multiple declines often point to applications going to lenders whose criteria do not fit, and specialist lenders may be able to consider circumstances that mainstream lenders will not.
Is a down valuation the same as a mortgage being declined?
No. A down valuation means the lender has valued the property below the price you agreed to pay. The lender may still lend, but on the lower figure, so you would need to make up the difference, renegotiate the price or look at other options with your adviser.
Written by Toby Quanstrom CeMAP, Director at Quanstrom Financial, a whole-of-market mortgage broker based in Eastbourne, East Sussex.
This article is for general information only and does not constitute financial advice. Lending criteria varies between lenders and can change, so always check your specific circumstances with an adviser before making a decision.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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