Updated: January 07, 2022

Mortgage Declined - What to Do Next

If you have recently had a mortgage refused, it's still possible to get a mortgage. Read our guide and find out how

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Pete Mugleston

Author: Pete Mugleston - Mortgage Expert

Updated: January 07, 2022

Applying for a mortgage can be a stressful, long-winded process so the last thing you want is your application to be declined. Whatever the reason, try not to feel too dejected. Just because one lender has turned you down doesn’t mean they all will.

This guide will outline all you need to know about why mortgages are declined, what you can do if you’re turned down by a lender and where to look for help and guidance.

Read on for more information or jump to the section that’s relevant to you via the links below…

Why are mortgage applications declined?

Unfortunately people are refused mortgages all the time, for a variety of reasons, such as:

  • Poor credit record
  • Affordability
  • Deposit too low
  • Problems with the property valuation

Here’s a summary of the most common causes and why your application could be declined as a result:

You have bad credit history

When a lender is considering your mortgage application, one of the first things they’ll look at is your credit report. This details all your past loans and credit records if and when you paid them back. The lender will use this report to assess whether or not you’re a reliable borrower. The lender will use this report to assess whether or not you’re going to prove to be a reliable borrower for the new mortgage you are applying for.

If you have a history of skipping loan repayments or missing payment deadlines, there’s a high chance your mortgage could be declined.

Your credit report is also used to help determine your credit score, which is a numerical value that depicts your creditworthiness. The lower your score, the more likely you are to be rejected.

There are three main credit agencies in the UK – Equifax, Experian, and Transunion – and it’s worth noting that different credit agencies might assign you a different score as they each have their own criteria.

It’s also important to remember that there’s no minimum score to get approved for a mortgage.

You have insufficient disposable income

Mortgage lenders run pretty strict affordability checks before deciding whether to approve or reject your mortgage application. More specifically, they’ll calculate your debt to income (DTI) ratio. To do this, they’ll look at your salary and other sources of income.

They’ll also review your disposable income – that is how much money you have left each month after all outgoings (mortgage repayments, rent, food, utility bills and any other debts) have been paid.

If your disposable income is deemed too low, this could be a red flag for a lender that, at some stage during the term, you could run into difficulties keeping up with your mortgage repayments. As a result,  your mortgage application could be rejected. Try our debt-to-income calculator below to find out how risky your DTI makes your to mortgage lenders.

calculator icon

Debt to Income Ratio Calculator

You can use our debt-to-income (DTI) ratio calculator to work out how much of your income is going towards your fixed outgoings, expressed as a percentage. Based on that percentage, this tool will tell you whether mortgage lenders will class your DTI as low, medium or high.


The amount you get paid each month, after any taxes or contributions have been deducted
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Be sure to include all of your fixed outgoings, as well as any loans or credit card payments you make
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Your Debt to Income Ratio is %

Risk Low Moderate High

Good news! Most mortgage lenders will class your debt-to-income ratio as low. You’re unlikely to be declined for a mortgage based on your outgoings, but speaking to a mortgage broker before applying is still recommended as they can improve your chances of getting the best deal.

Most mortgage lenders will class your debt-to-income ratio as moderate, which means some of them might view your application with caution. Some lenders are much more strict than others when it comes to affordability and debt, so it’s important for you to find a lender who’s more lenient. You should speak to a mortgage broker before you apply to ensure you’re matched with a lender whose criteria you fit.

Most mortgage lenders will class your debt-to-income ratio as high. But that’s where we can help! With so much of your monthly income going towards debt repayments, you could struggle to get approved for a mortgage without the help of a mortgage broker. We can help you find a lender who’s more lenient on debt and affordability, and could still secure a mortgage approval.

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However, it’s worth remembering that lenders all have their own affordability criteria, so don’t panic if your disposable income is on the low side. An experienced broker can match you with the best mortgage provider for your circumstances.

Your deposit is too small

The smaller your deposit, the more likely you are to have your mortgage rejected. Lenders tend to prefer larger deposits because you’ll be borrowing less and therefore be considered to be lower risk for the loan you are applying for.

That’s not to say you can’t get a mortgage with a small deposit. In fact, it’s possible to get a mortgage with a deposit of just 5%. But having a larger deposit will unlock a wider choice of lenders, better rates and increase your chances of having your application approved.

If you have a small deposit, a specialist broker can advise which lenders will consider your application and which are more likely to reject you.

You’re declined at valuation

As part of the application process, the lender will appoint a qualified valuer to carry out an assessment  of the valuation of the property you’re hoping to buy to make sure it’s worth what you’re paying. If you pay for a more detailed survey, the surveyor will also check for any structural or roofing damage as well as signs of damp, asbestos or Japanese knotweed.

If the surveyor’s report says the property isn’t worth what you’ve agreed to pay – or if it’s what’s considered to be of ‘non-standard’ construction (made from concrete, steel or timber-framed, for example) – your mortgage could be declined.

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What can you do if your mortgage is declined?

If you’ve had a mortgage application rejected, it’s not necessarily the end of your home buying journey. But before you think about reapplying, it’s worth taking some simple steps to improve your chances of being accepted.

Here are a few things you can do:

Speak to a mortgage broker

The shrewdest move to make if you’ve been denied a mortgage is seek advice before you reapply. Try connecting with an advisor who specialises in applications that have previously been declined.

They’ll have the knowledge and experience to deal with even the most complicated circumstances, and importantly, will be able to guide you through the application process, tell you which lenders to approach, and increase your chances of getting approved.

They’ll also be able to negotiate with lenders on your behalf. If you get in touch we’ll arrange for an advisor we work with, who specialises in this area, to contact you directly.

Fix your credit report and boost your credit score

As previously mentioned, lenders will carefully scrutinise your credit report to assess how reliable you’ve been in the past at repaying loans. If there are errors on your credit report, make sure they get fixed before making your next application. You have the right to challenge any mistakes – or at the very least add a note to your report explaining any late or missed payments.

It’s worth checking all three credit agencies as different lenders use different agencies – and some lenders will review all three.

You can download your credit reports through our dedicated credit reports hub.

Your credit score can also determine whether your application is approved or declined so take the opportunity to boost yours if it’s on the low side. Remember, your credit score may differ depending on the agency, so check your score with all three.

There are several things you can do to boost your credit score.

These include:

  • Making sure you’re registered on the electoral roll at your current address. This proves you live where you say you do. Registering is easy and free to do.
  • Limiting the number of credit applications you make. If you apply for too many loans within a short space of time, it may seem as though you’re living beyond your means, which could damage your score.
  • Making payments on time and keeping within your credit limits.
  • Keeping your finances separate from a partner or housemate with a poor credit history. If you have a joint bank account, for example, a lender may take their past behaviour into account when assessing your creditworthiness.

Build up a bigger deposit

If your application has been rejected because your deposit is too small, you could put your purchase on hold and try saving some more money. While it’s possible to get a mortgage with a 5% deposit, if you can manage to save 10% or more, your chances of being approved will massively increase.

If saving more isn’t an option, it’s worth talking to a specialist mortgage broker who will be able to tell you which lenders are most likely to look at your application favourably. While some lenders will outright reject applicants with a deposit of less than 10%, others will consider them.

Another option is reapplying using one of the government’s mortgage deposit schemes. 

The Help to Buy scheme, for example, enables buyers with a 5% deposit to borrow up to 20% of the property purchase price from the government interest-free for five years. They then borrow the remaining amount from a lender. The loan must be repaid after 25 years, or earlier if the property is sold.

Get matched with a specialist mortgage broker today

Having a mortgage application rejected can be a devastating experience, but it doesn’t mean you have to abandon your dreams of homeownership. Working with the right broker can dramatically improve your chances of being approved by a lender.

Make an enquiry or give us a call on 0808 189 0463 and we’ll match you with a broker who can help. We hand-pick all the brokers we work with and meticulously vet them on your behalf so you can be assured you’re getting the best advice possible.

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Pete Mugleston

Pete Mugleston

Mortgage Expert

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

FCA Disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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