Declined Mortgages

Can I still get a mortgage after being declined?

Yes, this is a question we get asked quite frequently. Mortgages do get declined now and then and the answer in simple terms is yes, you can. There are a few things to consider, however, including why you were declined in the first place and at what stage.. 

Usually, if you’ve got a full mortgage application and there’s a decline, there’s the possibility that you’ll be able to go elsewhere. One reason you wouldn’t be able to get another mortgage is some kind of fraud has been detected on your mortgage application. But generally if you have had a mortgage declined that isn’t the end of the road. 

A good mortgage broker should be able to establish why it was declined by the lender and make recommendations moving forward. It can be that you have two or three declines before you actually get a yes. That isn’t common, but it has been known in the past.

Why would you get declined for a mortgage?

There are a few reasons. First, as we’ve said, fraud is detected. That could come in several forms. It could be that fraudulent income has been declared or that documents you’ve provided are deemed not to be genuine. 

On a Buy to Let mortgage it could be that the lender suspects that you will live in the property rather than rent it out. And vice versa, if you’re not going to live in a residential property and instead let it out, that could lead to a mortgage decline. 

Then there could be factors around your credit file. Most lenders will have a system that will electronically check your credit. Sometimes something on your credit history may slip through the net. You could get accepted for an Agreement in Principle, then, when a human looks at it they assess that the risk is too great and the mortgage is declined. 

Another common decline is what I would call a ‘maximum loan’ – where they haven’t actually declined you for the mortgage, but they believe you have applied for an amount that they don’t believe is affordable, having assessed your bank statements and other documents.

Another more niche thing that can cause problems is multiple payments to gambling sites on your bank statements – irrelevant of whether you are winning or not. Lenders do not care. If you’re consistently betting on a weekly or daily basis that’s deemed as a real risk. More recently, subscriptions to websites such as OnlyFans and things like that have also caused declines by lenders based on their attitude to spending behaviours. 

At what stage can a mortgage be declined?

Most declines will happen at the Agreement in Principle stage. So it’s not even really a decline for the mortgage. It’s just that you can’t proceed with an application. I would say more than 90% of declines come at Agreement in Principle stage where either a computer says no, or your credit score does not pass the lenders’ requirements. 

Less common is that you apply for the mortgage and the lender declines it once they have seen all of your documents and assessed your bank statements. Any of the reasons we just mentioned could apply, and one thing that I haven’t touched on is that you could be accepted but the property can be declined. 

That’s fairly common as well, where the surveyor does not feel the property is suitable as security for the lender. Because the property was declined, you could easily go and buy another property with the same lender.

Does having a mortgage rejected affect credit score?

People will perhaps be aware of the terminology of a ‘soft footprint’ and a ‘hard footprint’ on your credit file.

With most lenders, getting an Agreement in Principle is now a soft footprint which basically shows on your credit file like a quote. One thing to consider is if you’re using price comparison sites, they will credit check you not just once, but for every comparison. So if you check your credit file a day after doing one of those you will see tens if not hundreds of credit checks against you. They appear as quotes and they shouldn’t affect your credit score. 

For the Agreement in Principle, when a human is looking at your credit file there may well be questions about credit searches to different banks for mortgages that didn’t proceed to an application. So whilst it shouldn’t affect your overall score, it does affect your file and it can raise questions. 

The score can be affected if you’ve had a rejection on a full application because the full application is a hard search on your file. It won’t document that there was a decline, but if there are multiple hard searches on your file that will negatively affect your score.

What should I do after my mortgage has been declined?

If your mortgage was declined at Agreement in Principle stage I wouldn’t stress too much. That’s a very common thing to happen, particularly if there’s any adverse credit there. You need to be upfront – if your mortgage broker hasn’t asked for your credit file before doing an Agreement in Principle, you need to change your mortgage broker immediately!

You could have someone with an immaculate credit file and their Agreement in Principle is declined. And it’s just because internally that lender is not scoring them high enough. In essence there’s nothing wrong, the lender is just not keen. There’s no feedback other than you didn’t pass, the score wasn’t high enough. In that instance, you would probably just try the next affordable lender and 99 times out of a hundred it will go through.

Now, if you’re at full mortgage application stage and it’s declined we really need to understand why that is. Is it due to affordability or credit? If it’s to do with the property, that’s quite easy to solve – you just need to walk away and find another.

If it’s to do with your credit, we need to understand what the issue is – why it was okay for an Agreement in Principle and why it isn’t now. Then we can see if there are ways we can appeal that and overcome it. Otherwise it’s a case of establishing the next steps. 

The only issue people will have moving forward is if fraud is detected – that’s a real issue. We never get told as brokers whether there’s fraud, but if we aren’t told why it’s declined that’s usually an indicator of an issue. So overall, the next steps really depend on the stage and the reason for the decline.