Credit History Issues
Credit problems are the most frequent cause of mortgage declines. Missed payments, defaults, CCJs, IVAs, and bankruptcies all raise serious concerns for lenders. Even less severe issues — like high credit utilisation or numerous recent credit applications — can tip the balance against you.
Some credit issues are more damaging than others. A single missed payment from three years ago is far less concerning than a recent default or CCJ. Payday loans on your credit file can lead to automatic declines with many mainstream lenders, regardless of when they were taken out.
Affordability Failures
Since the Mortgage Market Review (MMR) rules introduced in 2014, lenders must carry out thorough affordability assessments. They stress-test your ability to make repayments not just at the current rate, but at a higher rate — typically 2% to 3% above the product rate or a minimum threshold, whichever is higher.
If your income doesn't comfortably cover the mortgage payment after accounting for all your other commitments and living costs, the lender will decline on affordability grounds. High levels of existing debt, childcare costs, or a recent reduction in income can all lead to an affordability failure.
Property Issues
Sometimes the application is fine but the property causes problems. Lenders have restrictions on property types and conditions. Common issues include non-standard construction (concrete, steel frame, thatched roof), structural defects identified during the valuation, properties above commercial premises, short leaseholds, and properties affected by Japanese knotweed or flooding.
A down valuation — where the surveyor values the property lower than expected — can also lead to a decline if the resulting loan-to-value ratio exceeds the lender's limits for the product you applied for.
Application Errors and Inconsistencies
Inaccurate or inconsistent information on your application can result in a decline. Lenders cross-reference the details you provide against your credit file, bank statements, and payslips. If there are discrepancies — even innocent ones — it can raise suspicion and lead to further scrutiny or outright rejection.
Common mistakes include incorrect employment dates, failing to declare existing financial commitments, and discrepancies between stated income and what appears on payslips. Always double-check every detail before submitting your application. Providing incomplete documentation is another frequent cause of delays and declines.
Important: Your home may be repossessed if you do not keep up repayments on your mortgage. There will be a fee for mortgage advice. The actual rate available will depend on your circumstances. Think carefully before securing other debts against your home.