Common Reasons for Mortgage Declines
Mortgage applications are declined for a wide range of reasons, and lenders aren't always specific about why. Common causes include poor credit history, affordability concerns, unstable employment, issues with the property, and discrepancies in the application. Sometimes applications are declined by automated scoring systems even when a manual review might have reached a different conclusion.
If the lender doesn't give you a clear reason, checking your credit report is the logical first step. Look for adverse marks you may not have been aware of — missed payments, defaults, CCJs, or financial associations with someone who has poor credit.
Steps to Take Immediately After a Decline
First, don't panic and don't rush to apply elsewhere. Each new full application creates another hard search on your file, making subsequent applications harder to approve. Instead, take a step back and investigate the reason for the decline.
- Request the reason for the decline from the lender (they must tell you if a credit reference agency was involved)
- Check your credit reports with all three main agencies for errors or adverse information
- Review your bank statements for anything that might concern a lender, such as gambling, excessive spending, or frequent overdraft use
- Speak to a mortgage broker who can assess your situation and identify the best path forward
How Long to Wait Before Applying Again
There's no mandatory waiting period, but applying too quickly after a decline is counterproductive. If the decline was due to a credit issue, you'll need time to address it. If it was an affordability problem, your circumstances may need to change. As a general rule, waiting at least three to six months gives you time to improve your position and lets the hard search from the declined application age.
Some brokers recommend applying to a different, more suitable lender immediately if the decline was clearly due to lender-specific criteria rather than a fundamental problem with your application. However, this should only be done with professional guidance to avoid accumulating more searches.
Working with a Mortgage Broker After a Decline
A mortgage broker is arguably most valuable after a decline. They can review your application, identify what went wrong, and match you with lenders whose criteria fit your profile. Whole-of-market brokers have access to specialist lenders that you can't approach directly, and they understand the nuances of different lenders' underwriting criteria.
A good broker will also manage the application process to minimise further credit searches. They may use soft-search tools to check eligibility before recommending a full application, protecting your credit file from additional hard searches while you find the right lender.
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.