What Stops You From Getting a Mortgage?

Buying a home is an exciting prospect, but getting a mortgage isn’t always straightforward. Many people find their application rejected without fully understanding why. If you’ve been turned down or worry you might be, knowing the common reasons that stop you from getting a mortgage can help you prepare.

Here’s a straightforward guide to the main issues that can prevent your mortgage approval in the UK.

1. Poor Credit Score

Your credit score significantly influences your ability to get a mortgage. If you’ve missed repayments, defaulted on loans, or had financial difficulties in the past, your credit score will reflect this. Mortgage lenders view a low score as a higher risk, meaning you might struggle to secure approval.

To boost your credit rating:

• Pay bills on time.
• Register to vote (electoral roll).
• Keep credit utilisation low.
• Correct any errors on your credit report.

2. High Levels of Debt

Lenders examine your existing financial commitments closely. If you’re juggling significant credit card debt, personal loans, or car finance, lenders might worry about your ability to afford mortgage repayments. Reducing existing debts or consolidating them can improve your affordability profile.

3. Insufficient Deposit

In the UK, the typical deposit required for a mortgage ranges from 5% to 20% of the property’s value. If your deposit is too small, lenders see this as risky, potentially stopping your mortgage approval. Saving a larger deposit or exploring schemes such as Help to Buy or Shared Ownership could provide solutions.

4. Employment Status

Your employment situation impacts mortgage decisions. Lenders prefer applicants with stable, long-term employment and steady income. Self-employed applicants, freelancers, or those on temporary contracts may find it harder, although specialist lenders cater specifically for these situations. Having at least two years of accounts and tax returns can strengthen your application.

5. Affordability Checks

Lenders will scrutinise your income and spending habits to assess whether you can comfortably afford repayments. Excessive spending habits, frequent overdrafts, or consistent gambling activity on bank statements could raise red flags. Improving spending habits at least three to six months before applying can significantly increase your chances.

6. Age and Mortgage Term

Age can impact your ability to get a mortgage. Older borrowers often face limits because lenders prefer mortgages to be fully repaid before retirement. Although this doesn’t stop older applicants completely, shorter terms or specialist lenders might be required.

7. Property Issues

Sometimes the issue isn’t you—it’s the property you’re trying to buy. Unusual construction, structural problems, or properties close to flood areas may put lenders off. If this happens, you might need a larger deposit or choose a different property.

8. Recent Changes in Circumstances

Recent financial changes—such as starting a new job, changing employment type, or going through a divorce—can delay or stop your mortgage application. Waiting a few months until your circumstances stabilise could improve your chances of approval.

9. Past Financial Issues

Previous bankruptcy, County Court Judgements (CCJs), or Individual Voluntary Arrangements (IVAs) can seriously harm mortgage eligibility. However, over time these issues have less impact, especially after several years. Specialist lenders are often available, though typically at higher interest rates.

10. Too Many Mortgage Applications

Applying for multiple mortgages within a short period leaves ‘footprints’ on your credit record, indicating desperation for credit. It’s better to approach a mortgage broker who can identify the right lenders for your circumstances rather than applying widely yourself.

11. Other Factors That Can Stop You Getting a Mortgage

Aside from major financial issues, some less obvious factors can also prevent your mortgage application from being approved. Here are several common—but often overlooked—issues:

• You’re Not Registered on the Electoral Roll: Lenders use the electoral roll to verify your identity and residential history. If your details aren’t listed or are outdated, mortgage lenders may struggle to confirm your information, resulting in rejection. Fortunately, registering to vote is quick, easy, and free. Simply contact your local council or register online through the government’s website.
• You’ve Made Administrative Errors on Your Application Form: Small mistakes on your mortgage application can cause unnecessary delays or rejection. Misspelled names, incorrect addresses, inaccurate employment details, or providing inconsistent information can trigger lender concerns. Always double-check your form carefully before submitting it, and if possible, ask a mortgage adviser or broker to review it for accuracy.
• You’ve Taken Payday Loans: Payday loans on your credit record can be a red flag to mortgage lenders. These short-term, high-interest loans suggest financial instability or difficulty managing money. Even if you’ve fully repaid payday loans, lenders often view them negatively, especially if you’ve used them recently. To improve your mortgage chances, avoid payday loans for at least 12 months before applying.
• You’ve Recently Changed Jobs or Employment Status: Stability is crucial to lenders. Changing your job or employment status, such as shifting from employment to freelancing or starting your own business, can make lenders cautious. They prefer borrowers with stable, predictable incomes. If you’ve recently changed your employment status, consider waiting at least six months—or preferably longer—until you can provide reliable proof of income, payslips, or accounts demonstrating consistent earnings.
• Being Financially Linked to Someone with Bad Credit: If you have a joint account, joint loan, or mortgage with someone who has poor credit, lenders might see you as financially connected. This association can negatively affect your own mortgage application. Consider closing or separating any financial ties before applying.
• Irregular Income or Bonuses: Lenders prefer steady, predictable incomes. If a significant portion of your earnings comes from irregular overtime, bonuses, or commissions, some lenders may view your income as less reliable. You might need specialist lenders or additional evidence to prove consistent earnings over a longer period.
• Unauthorised Overdraft Usage: Consistently using an unauthorised overdraft is a clear sign of financial mismanagement and will concern lenders. Aim to keep your accounts in credit or within an agreed overdraft limit, ideally for at least three months before applying for a mortgage.
• Issues with Proof of Address or Identification: If you can’t clearly prove your address history or identity documents, your mortgage application can be delayed or refused. Keep your documents organised and up-to-date, including bank statements, utility bills, passport, or driving licence.
• Frequent Gambling Transactions: Regular gambling, even small amounts, visible on your bank statements may raise red flags for lenders. To avoid difficulties, limit or eliminate gambling transactions from your financial records for at least six months before applying.
• Childcare or School Fees: Significant childcare or school fee commitments reduce your disposable income, potentially impacting affordability checks. While not always an automatic refusal, lenders will factor these costs into their calculations, which may reduce how much you can borrow.
• Student Loans and Repayments: Having a student loan isn’t an automatic barrier to getting a mortgage, but lenders factor repayments into affordability calculations. If repayments are high relative to your income, this may reduce the amount lenders are willing to offer.
• Poor Relationship with Your Bank: Your current bank may offer mortgage deals, but if you’ve had financial issues with them (such as failed direct debits or overdraft breaches), they’re likely to decline you. In this case, approaching alternative lenders or improving your relationship with your bank beforehand can help.
• Buying Above Market Value: If a lender’s valuation of the property is lower than the purchase price you agreed, they may refuse the mortgage or offer a smaller loan. In this scenario, renegotiate the price or look at a different property.
• Not Meeting Residency Requirements: Some lenders have residency rules requiring you to have lived in the UK for a certain amount of time before granting a mortgage. If you’ve recently returned from overseas, it’s worth speaking to a mortgage broker who understands specialist lenders.

Addressing these lesser-known issues can greatly improve your mortgage application’s likelihood of success.

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