What to do if your mortgage application is refused

There are many reasons why a mortgage application could be refused, and it’s important to remember that a refusal now is not a lender saying they won’t ever lend to you. You should speak with your lender/broker to understand the reasons why your application was refused so that you can improve any future applications.

Some reasons why an application could be refused, include:

• your income is not enough to repay the amount you wish to borrow
• you don’t have a sufficient deposit
• you have a poor credit history because you missed repayments or didn’t pay off another loan
• your age. Lenders have an upper age limit they require a loan to be paid off by, typically between 65 and 70. So if you are over 40 years of age and seeking a mortgage with a term of 30 years you may have difficulty getting approval
• you work on contract, are not permanently employed, your job is at risk or you only recently started in a new job
• your bank statements show that you cannot save, manage your money or have excessive gambling habits
• the lender believes the property you want to buy is overvalued

What can you do?

In many cases you can improve your application, for example by

• saving a larger deposit
• waiting for your probation period to end
• paying off loans or credit cards

In these cases, you should apply again when you are ready. If you have had two mortgage applications refused and meet other certain criteria, you may qualify for a Local Authority Home Loan.

If you are having trouble with the mortgage application process it may be helpful to talk to a financial or mortgage adviser.