What Stops You From Getting a Mortgage?

There are several problems you could encounter that might prevent you from getting the mortgage you need for your dream property. Most of these are around affordability but there’s a few other reasons why your application may not be approved.

This article covers all the factors that can stop you getting a mortgage, how you can strengthen your application and where to look for any help you might need.

What can stop a mortgage application?

There’s a range of reasons that could cause your mortgage application to be declined, not just a lender’s concern about your ability to make repayments. Some of the most common factors would be:

Affordability

Lenders need the confidence of knowing you can meet your monthly mortgage commitments throughout the term. If there’s any doubt, based on the information and evidence of earnings you’ve submitted, this can stop you from getting a mortgage.

This could be because:

• Income is too low and/or outgoings too high
• Insufficient deposit
• Too much existing debt

Not on the electoral roll

Pretty much all lenders will check you’re registered on the electoral roll at the same address you’ve put on the application. Being on the electoral roll can help boost your credit score, and in extreme cases, this might be the difference between rejection and approval.

This is quite a common issue but really easy to fix. More information about how to register can be found on the UK Government’s website.

Incomplete application

Submitting incomplete details can stop a mortgage application but it’s definitely something that can easily be avoided.

If you’re unsure what is required by the lender, it’s wise to seek the help of a professional mortgage broker who can ensure that everything has been completed correctly before it’s submitted.

Have a look at our mortgage application guide for more information on what documentation is required.

Bad credit history

Mortgage lenders want to be sure that you aren’t a bad credit risk before accepting your application. They will look at your report to assess your creditworthiness and to confirm you pay your debts on time.

A poor credit history can – depending on the severity of the issues – stop your application from going any further with that lender.

Due to the volume of applications received by high street banks, they use a computerised credit scoring system and various algorithms to determine your creditworthiness. It can sometimes feel like ‘computer says no’, hence why it’s so important to speak to an experienced advisor who can help you navigate this complex process.

Self-employed without proof of income

If you’re self-employed, you will probably need at least 2 years tax returns as your proof of income. This means that if you have recently set up on your own, it can be very difficult to get a mortgage in the first couple of years running your own business.

There are, however, some specialist lenders who will still consider applications from someone who is newly self-employed and an experienced mortgage broker would be able to help you find them, but they can be difficult to find without a broker.

Having financial ties to someone else

If your finances are linked to someone else, for example you have a joint bank account, this can stop you from getting a mortgage if the other person has a bad credit rating. If you find yourself in this situation, close the joint account and update the credit reference agencies.

Issues with the property

Your mortgage application can stop if your lender is concerned about the value of the property relative to your requested loan amount. If a valuation suggests there are structural problems such as roof issues, subsidence or other concerns that could lower the value, then your lender may decline your application or offer a lower loan amount.

Age restrictions

Once you pass retirement age, it can be much harder to find a lender who will give you a mortgage. Some lenders have restrictions and won’t offer mortgages to anyone over age 75, but there are a few who have no upper age limit.

Understanding mortgage eligibility criteria

This area can be fairly complex with different rules applying for different types of mortgages (interest-only/repayment), different properties (new-build/buy-to-let), different employment statuses and so on.

Each lender has their own set of eligibility criteria. Some of this information is readily available on lenders’ websites, but sometimes it can be helpful to use a knowledgeable broker to ensure that you fully understand all the criteria for the lender that you are planning to approach.

If you get in touch we can arrange for a broker experienced in making sure mortgage applications get over the finish line contacts you straight away.

What can you do to strengthen your application

Your application may be missing information that the lender needs to properly assess you as a borrower. That can be easily remedied. However, there are other actions you can take to improve your credit standing:

• Check your credit report and have any errors corrected immediately.
• Deal with any overdue payments for credit cards, store cards or loans. You need to pay these as soon as possible. Lenders like to see a clean payment record for at least 6 months, sometimes even 12 months.
• Carefully manage your available credit on any cards you use. Lenders like to see that you are only using around 25% of the credit limit at any one time.
• Close old, inactive credit accounts as these can be seen as a fraud risk and could harm your mortgage application.
• Don’t apply for other credit shortly before applying for your mortgage. If you have already done this, you may need to wait around three months after applying for credit before you make your mortgage application.
•  Increasing your deposit, even by a small amount can make a difference to your chances of securing a ‘Yes’ from your lender. For example, if you are applying for a mortgage of £80,000 on a £100,000 house and you have a £20,000 deposit, consider adding a couple of hundred pounds extra to your deposit to take it over the 20%.
• Try not to use any overdraft you may have on your current account for at least three months prior to making your mortgage application. Overdrafts suggest to lenders that you may be struggling to manage on your current income.

Getting support for dealing with mortgage application issues

Having your mortgage application stopped is frustrating but that doesn’t mean you won’t be able to get a mortgage when you apply again. An experienced mortgage broker can assess your situation and help identify what caused the issue.

This is where we can help. Our unique broker-matching service is designed to match you with a broker who has previously dealt with cases like yours. They will have all the knowledge necessary to make your next application a success.

Call 0808 189 0463 or make an enquiry today to get your journey to property ownership back on track.