What to do if your mortgage application is declined

Why would a mortgage application be declined?

There are lots of reasons this can happen, and all of them are fixable! A lender will decline a mortgage if something in your financial profile doesn’t meet their lending criteria. Here are the most common reasons we’ve helped people overcome: 

1. Poor or limited credit history

Lenders want evidence that you can borrow and repay responsibly. Missed payments, defaults, CCJs or a short credit history can all trigger a decline.

2. Too much existing debt

If your debt-to-income ratio is high, lenders may worry your finances are already stretched — even if you’re up-to-date with payments.

3. Too many recent credit applications

Multiple credit applications (car finance, credit cards, overdrafts, etc.) can be a red flag for lenders, as it gives off the impression that you’re desperate to borrow money and may struggle to pay it all back.

4. Insufficient income

Most lenders offer around 4 to 4.5× your annual income, though some are willing to offer bigger mortgages of 5x your income or even 6x your salary, but you’ll usually need a guarantor or a stable job in a ‘professional’ line of work. 

Learn more: How much can a first-time buyer borrow?

5. Buying alone

Single mortgage applicants may find it harder to get a mortgage than couples or friends buying a property together, if their income isn’t high enough to meet the lender’s criteria. 

6. Self-employment or variable income

If your income fluctuates, you’re newly self-employed, or you have less than 2–3 years of accounts, some lenders will approach your application with caution.

7. High regular outgoings

Childcare costs, loans, car payments, subscriptions, or high travel costs can all reduce your affordability. A lender may reject your application due to concerns that you won’t be able to afford your mortgage repayments on top of your existing responsibilities.

8. Not being on the electoral roll

Lenders use the electoral roll to verify a mortgage applicant’s identity, meaning your mortgage application may get declined if you’re not registered to vote. 

9. Lender-specific criteria

A lender might decline you simply because:

• Their affordability model is more conservative
• They tighten criteria after rate rises
• They change policy on certain job types or deposit sizes

The good news is that getting rejected by one lender doesn’t mean you’ll be rejected by the others. 

Does a declined mortgage damage my credit score?

No, a declined mortgage won’t damage your credit score automatically or even appear on your credit file. However, the hard search carried out during your application will show on your file. Multiple hard searches within a short period can lower your score and make lenders approach your application with caution

So while a rejection isn’t harmful in itself, applying for several mortgages or other types of credit within a short space of time can make things more difficult.

Why was my mortgage application declined after an Agreement in Principle?

An Agreement in Principle (AIP) is not a guarantee, and your full mortgage application may be declined if:

• The lender finds new information in your documents or credit file that makes you ineligible for a mortgage 
• Your circumstances changed (new job, more debt, maternity leave, reduced hours)
• Affordability rules tightened since your AIP was issued

If this has happened to you, it’s possible to get a mortgage from a different lender. 

Why was my mortgage application declined after a valuation?

Lenders conduct their own valuation to ensure the property is suitable security for the loan. Your application may be declined if:

• The surveyor down-values the property
• The building has non-standard construction (e.g., concrete, timber-frame, cladding issues)
• There are structural problems
• The property is considered difficult to re-sell

If you’d still like to buy the property, we can help you get a new mortgage offer.

What happens if you can't get approved for a mortgage?

It’s rare that we see people who can’t get a mortgage anywhere. If your mortgage is declined by one lender, don’t give up hope just yet. Here are a few options:

Speak to a specialist

There’s a lot of variation between lenders and some are stricter than others. You may be able to boost your chances of getting a mortgage by using a mortgage broker who specialises in helping first-time buyers with small deposits, the self-employed, or those with adverse credit, for example.

Improve your credit score or reduce your debts

If you’ve been rejected because of a low credit score or large outstanding debts, small changes (like lowering credit utilisation or correcting errors) can quickly change your eligibility.

Increase your affordability

Here are just a few ways you can increase your affordability. If you’re not sure which is right for you, create a free Tembo plan today and we’ll send you a breakdown of your options.

Income Boost (Joint Borrower Sole Proprietor)

Get a bigger mortgage by adding a family member’s income to your mortgage application without adding them to the deeds. This process is known as an Income Boost. Your helper won’t have any ownership of the property itself, but if you have difficulties paying your mortgage they’ll need to step in and help.

Shared Ownership

Shared Ownership lets you buy a percentage of a home and rent the rest, meaning you’ll need a smaller deposit and mortgage than you would ordinarily. 

Keep saving

A larger deposit can make a big difference, as it can reduce the amount you need to borrow and the lender’s risk. Explore our range of competitive savings accounts here.

What credit score is needed for a mortgage?

There is no official minimum credit score for a mortgage, as each lender uses different criteria and each credit agency uses different scoring systems. Having a ‘good’ or ‘excellent’ credit rating can certainly make it easier to get a mortgage, but even with a top score you’ll need to meet the lender’s affordability criteria too.

So try not to worry too much about your credit score itself. Instead, check your credit report for inaccuracies and look for ways to show that you’re a responsible borrower. 

How soon can you apply for a mortgage after being declined?

You can apply for another mortgage straight away, but remember that repeated applications in a short space of time can increase your chances of rejection. 

If you’ve already found a property you’d like to buy and you don’t want to miss out, speak to a mortgage broker before applying again. They’ll help you work out exactly why your mortgage application was declined in the first place and help you avoid it happening again.