Worried about your mortgage being declined? Here's what to do

5th September 2019

Couple looking at laptop

It’s perfectly normal to worry about your mortgage being declined. After all, owning a home is people’s number one goal in life, according to a recent study. (1)

While it’s true that mortgage approvals are rising - they increased by around 800 in June 2019 to 66,400 - they’re still within the narrow ranges that we’ve been seeing for the past three years, according to the Bank of England. (2)

So it’s definitely worth doing all you can to improve your chances of your mortgage being approved.

Do your groundwork first

When you apply for a mortgage, your lender will do what’s known as a hard credit check to make sure you can afford it.

If your mortgage is declined it’s likely to lower your credit score. This could be even more difficult for you to get a mortgage next time you apply.

So if you’re going to apply for a mortgage you need to be confident that it’ll be approved. And that starts with some groundwork.

Improve your credit score

If you’re worried about your existing credit score, it’s a good idea to check it before you apply for a mortgage.

You can get a free credit report from credit reference agencies such as Equifax, Experian and TransUnion.

Don’t panic if things don’t look good. There are many ways you can improve your credit score.

They include:

  • getting on the electoral roll

  • paying your bills and loans on time

  • paying your debts off early

  • keeping your credit card balances low

Get a Mortgage in Principle

Another thing to consider before taking the plunge with a full mortgage application is to get a Mortgage in Principle (MIP), also known as a Decision in Principle (DIP).

It’s a document from a lender showing how much they’re prepared to lend you - in principle.

It’ll give you a really good idea of how much you could borrow.

Bear in mind that a lot of lenders carry out a hard credit check for MIPs, so check with them first.

We do a soft credit check for MIPs, which doesn’t affect your credit score.

Beef up your deposit

You stand a greater chance of your mortgage being approved if you’ve got a decent deposit. This will lower the amount you need to borrow and lower the perceived risk in the eyes of the lender.

If you need help boosting your deposit, consider government schemes such as a Help to Buy ISA (hurry though - they close for new applications in November) or the Lifetime ISA. The government adds a 25% bonus on top of your savings with both of them.

Cut your costs

It also pays to cut back on your day-to-day spending before applying for a mortgage, since lenders will look through your bank statements to access your outgoings. So leave any splurges for the future.

Speak to an expert

A mortgage broker will help you assess your options before applying for a mortgage.

“There are lots of reasons why people get declined for a mortgage, and some of these may surprise you,” said Joe Gaytten, a Mortgage Adviser at Trussle. “So speak to an expert before applying for your mortgage. They’ll make sure your application has the best chance of being accepted.”

Sources:

1. Santander

2. Bank of England

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