The main reason for having a mortgage declined is that you don’t meet the lender’s criteria. Every lender will have slightly different requirements, but all of these are based on your financial situation. 

A lender wants to know how reliable you are as a borrower. Their assessment of you will be based on the certainty that you will be able to pay back the sum you borrow. In order to assess this, lenders will look at your credit score to see how well you manage your finances, if you have any debt and if so, if you are good at paying this back. 

If you have a poor credit history, the likelihood is that your application will be declined. To find out more about how lenders use your credit score, see our handy guide here.

Another common reason for mortgages being declined is simply down to error. If the incorrect information is provided, or if information is missing, then this can be the difference when having your mortgage approved. Be sure to double check everything you are providing is correct and accurate.

Mortgages being declined is quite a common issue, which can be very frustrating for homebuyers. Economic conditions in the last few years have been a big factor here; and as interest rates increased in 2022 some home buyers found their mortgage being declined or withdrawn just before completion. This has been due to a risk-averse reaction by lenders to increased rates and their impact on buyers’ ability to pay back mortgages.

That being said, there are a number of different things home buyers can do to increase their chances of having their mortgage approved. It mostly comes down to ensuring you choose the right mortgage for you, and that you can comfortably pay it back to your lender.

To improve your chances, you need to have a good handle on your finances and be able to show the lender that you are able to pay back your mortgage payments. A lot of this comes down to your income. If you can prove your income and show it covers your monthly mortgage payments, then your lender will know you can afford your mortgage.

This includes your outgoings, so a lender will look at your other financial commitments and weigh this up against your income to check that you can take on the additional financial responsibility of a mortgage.

Another thing to consider is your debt, and showing that you are good at paying this off. If you have a lot of debt, a lender may see you as a risk and decline your application. But equally, if you do have some debt - for instance a credit card - but you regularly pay this off, then this can help improve your credit rating.

All of this is tracked by your credit score, which assesses a number of things. If you miss a payment, default or have any CCJs this will affect your credit score and your chances of getting your mortgage approved. Another key thing is whether or not you're on the electoral roll, so if you’re applying for a mortgage, make sure you are registered to vote at the address on your application. 

It’s worth noting that it is possible to get a mortgage approval with a poor credit score, but you’ll need a far bigger deposit or potentially provide a guarantor to help cover the risk.

Your current or previous financial links to other people will also affect your application. If you share - or have shared - a joint account with another person with a poor credit history, this is taken into account by lenders. You can ask credit reference agencies (CRA) to de-link your finances. This is called disassociation, and can be done quite quickly once approved by the CRA.

If you have had your mortgage declined, the lender should be able to give you the reason, which means you can make the changes needed for your next application. That could be paying off debt, de-linking from a previous partner or closing down old unused accounts. It’s important you make these changes, and don’t just re-apply as multiple applications in a short space of time can affect your credit score.

If you’ve had your mortgage declined after agreement in principle this generally happens because a lender found something in the detailed information about your finances that didn’t meet their criteria. This is where using a mortgage broker can be really helpful. Brokers are familiar with different lenders’ criteria, and their knowledge can increase your chances of getting an agreement in principle (AIP) that will lead to a mortgage approval once you’re in a position to move forward with your purchase.

Short-term lending could be your lifeline here. If you’ve had a mortgage declined, you could apply for a short-term product that covers the value of the property while you arrange an alternative mortgage. These are interest-only products that last up to two years and can cover 100% of the purchase price.

Another option, which is particularly helpful for first time buyers, is a Joint Borrower Sole Owner lending product. This is where a buyer is able to borrow the amount needed to buy a property by including the financial stability of a family member in the criteria assessment. So the family member is essentially a guarantor, but isn’t named on the title deeds. To read more about how this product works read our case study here.

A one-off mortgage application will appear on your credit history, but it won’t affect your actual score. It does, however, appear as a hard search and if you were to make many credit applications in a short time frame this would result in a high number of hard searches, which can result in a low credit score. Most hard searches don’t appear on your credit report after a year.

Yes, you can always appeal a declined mortgage and it’s always best to do so with the support and knowledge of a mortgage broker. Presenting a clear and compelling case with updated information and documentation could potentially sway the decision in your favour. This isn’t to say you’ll definitely get a different outcome, and the best course of action is always to address the reasons why the application was declined.

Begin by understanding the lender's reasons for declining your application. You should rectify discrepancies or concerns, such as errors in credit reports or incomplete documentation. You can then strengthen your case by improving your credit scores, reducing debt, or securing a larger deposit.