Reapplying After Having a Mortgage Declined on Affordability
Take your time with reapplying unless it is obvious you have made a mistake on your application, or your circumstances have changed. In this case, you might find that your declined mortgage credit score is now significantly higher, or your lender won’t decide that a further application will end up with a mortgage declined on affordability.
Multiple applications to numerous lenders can negatively impact your future declined mortgage credit score due to hard checks run by the underwriter.
Instead, look at the reasons you’ve been turned down – that could be due to:
- Gambling income: this is considered high risk, and a mortgage declined gambling forum may be able to help, as could a niche lender who is happy to accept gambling as an income source.
- Payment holidays: If you have had a mortgage declined due to payment holiday history, there may be more suitable options for you than your selected lender.
- Late payments: some applicants have a mortgage declined due to late payment history, even if they have a good credit score, again meaning a different lender is more appropriate.
- Rental arrears: if you have a mortgage declined ground rent related, your best option may be a bad credit lender. Does a declined mortgage affect credit and worsen your prospects? It may, so careful lender selection is essential.
It is always important to seek independent advice rather than assuming that a declined mortgage credit score means you cannot move forward with your property purchase. You may also have a refused mortgage with excellent credit score history if your application is declined for another reason.
Revolution Finance Brokers specialises in helping people who have had a mortgage declined due to bank statements or another affordability issue. We can match your requirements, finances, and circumstances with a huge number of lenders who are able to support applicants who have had a mortgage declined on affordability with another provider.
Independent brokers can provide invaluable support, negotiate with lenders, and ensure you get a great deal, ensuring we know why you have had a mortgage declined by underwriter UK and the best solutions.
How Many Mortgages Get Declined at Underwriting Stage on Affordability?
Thousands of mortgages are rejected due to affordability, even if you’ve had an agreement in principle. Why might you have a mortgage declined by underwriter UK?
The underwriter conducts a more thorough assessment following your initial application. They will inspect your records, finances and even tax returns, so you could, for example, have a mortgage declined due to bank statements not going back far enough.
Below we run through some of the common scenarios where you might find yourself with a mortgage declined on affordability. We’ll also explore the question of does a declined mortgage affect credit and why.
Mortgage Declined Due to Bank Statements or Income
If the lender believes your income is not high enough, you might have a mortgage declined on affordability. Lenders don't simply look at your earnings and outgoings but will offer a maximum multiple of your salary.
Normally, that is around 4.5 times, so if you want to borrow £250,000, you, or you and a joint applicant, need to earn £55,555 a year to qualify – any lower, and you could have a mortgage declined on affordability, even if you are confident you can manage the repayments.
Specialist lenders can lend five times your income or even higher, so all is not lost if you have had a mortgage declined on affordability based on the maximum amount one lender is prepared to offer. Does a declined mortgage affect credit going forward? Potentially, yes, if you have multiple hard credit searches on your file this can impact future mortgage processes. Some lenders may decide to issue a refused mortgage with excellent credit score history for other reasons.
Having a Mortgage Declined Due to Payment Holiday History
Mortgage providers look at your debts, outgoings, and other obligations and it is possible to have a mortgage declined due to payment holiday agreements. The affordability process compares fixed costs to income, calculating your remaining budget to pay the mortgage. If they believe your outgoings are too high, you could have a mortgage declined on affordability due to your debt-to-income ratio – or may decide to issue a mortgage declined due to payment holiday decision due to concerns about your affordability.
Applicants with a history of payment holidays, payday loans or other borrowings might also have a mortgage declined on affordability, or a mortgage declined due to payment holiday history because the lender thinks their outgoings are too steep.
However, these assessments are specific to each application, and if one lender decides your expenditure is too high, you won’t necessarily have a mortgage declined on affordability through another provider. Not every applicant will have a mortgage declined due to payment holiday purely because they have taken advantage of these arrangements.
Having a Mortgage Declined on Affordability Due to Your Income Source
Lenders prefer applicants with a fixed annual salary, static income, and employment contracts. If you are self-employed or earn the bulk of your income through bonuses, you could have a mortgage declined by underwriter UK even if you make substantially more than necessary.
We can recommend mortgage lenders who will recognise all income streams, including 100% of the below categories, ensuring you won’t have a mortgage declined on affordability again:
- Commissions
- Overtime
- Bonuses
- Investment returns
- Pension income
Having a Mortgage Declined by Underwriter UK for Another Reason
Underwriters can reject applicants if they think there is the potential for their circumstances to change. For example, you could have a mortgage declined due to bank statements showing variable income and outgoings.
Does a declined mortgage affect credit scoring? It can, depending on the stage of the application at which the underwriter decides to turn it down.
Mortgages tend to last for 25 years as standard, so any indication that your finances are unsustainable could mean having a mortgage declined on affordability. Lenders will stress test interest rates, so applicants who can comfortably afford the repayments now could still have a mortgage declined by underwriter UK if a potential increase would make the repayments unaffordable.
Can I be refused mortgage with excellent credit score? You can, yes, if the underwriter feels the application is too high risk for any reason.
How to Move Forward After Having a Mortgage Declined on Affordability
Being turned down for a mortgage is far from unusual, and if you've had a mortgage declined due to bank statements, you are certainly not alone.
You could also find that you are offered an agreement in principle and still have a mortgage declined on affordability before the mortgage is completed because your circumstances have changed.
This scenario applies to remortgage applicants as well as first-time buyers. If you need to remortgage but have a mortgage declined due to payment holiday history or any other reason, we recommend speaking with Revolution Finance Brokers as soon as possible.
Specialist brokers match every applicant to a suitable lender based on an assessment of why you have had a mortgage declined on affordability, including income sources, multiples of your salary, credit risk and any other factor.
The key is to remember that a declined mortgage credit score or having a mortgage declined due to late payment history is far from the end of the road, and there are countless niche providers who will be happy to help. Lenders can also advise of a refused mortgage with excellent credit score because of other lending policies unrelated to credit.
