After a mortgage refusal: understand why first
A refusal is not the end of the road, but sending the same application again without checking what stopped it may end with the same answer. How to find the reason, and what to check before you apply again.
By Lidor Levin3 min readPreparing to apply
A mortgage refusal is disappointing, and sometimes a surprise. The natural urge is to go straight to someone else, but sending the same application again, without checking what stopped it, may end with the same answer. The first step is to understand the reason.
Why applications are turned down
Every application is assessed on its own details, so the reasons vary. These are some common places to look:
- Ability to repay: the repayment asked for is high compared with income and commitments.
- How the account is run: going over the limit, bounced cheques or direct debits that were not honoured.
- Existing commitments: other loans weighing on the overall picture.
- Income that is hard to show: for example self-employed income, income that varies, or a short time in a job.
- Missing or inconsistent documents: gaps between what the application says and what the documents show.
This is not a complete list, and not every point applies to everyone. The aim is to know where to look.
How to find the reason
If you received a refusal letter or an explanation by phone, start there. Beyond that, go through the application the way the reviewer saw it: the bank statements, the income, the commitments and the documents attached. Sometimes the reason is obvious; sometimes it builds up from several small details.
What you can do before applying again
- Fix what can be fixed: tidy how the account is run, complete the documents and explain any gaps.
- Consider changing the request: a different amount, term or loan structure.
- Look at your commitments: sometimes it is worth checking loan consolidation before a new application.
- Choose the timing: sometimes it is right to wait until a particular detail changes rather than apply at once.
No one can promise approval, even after all the preparation. What you can do is submit a more accurate, more responsible file that shows the picture as it is. Start with the list of documents and make sure it is complete and consistent.
Before applying again
- Find out whether the concern is income, commitments, credit information or the property; each calls for a different check.
- Review the documents and information used in the application, and support any correction with evidence.
- Apply again when you can explain what has actually changed, rather than simply rewriting the same application.
Common questions
Does one refusal affect the next application?
Every application is assessed on its own details. What matters is understanding what stopped the last one, and applying again only after checking what has changed since.
How long should I wait before applying again?
There is no single answer. It depends on the reason for the refusal and on what needs to change. Sometimes you can move quickly; sometimes it is better to wait until the details improve.
General information only, not personal advice. Every figure here is for illustration.
Further reading
Want to look at this for your own case?
On the intro call we'll go through what happened with the last application and work out together what to check before the next step.
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