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First-time buyer mortgage rejections spike: Here’s how to boost your chances of being accepted

First-time buyers are more likely to be rejected for a mortgage than they were before the pandemic, a new study has found.

Only one in five prospective first-time buyers were able to get a mortgage on their first attempt, according to Aldermore Bank’s annual survey of people who have got on the housing ladder.

This represented a huge decrease compared to last year, when nearly half said they had been able to get a mortgage on the first attempt.

The main reason for a rejected mortgage application was that the prospective first time buyer has poor credit history. In March 2021, 41 per cent said this was a cause of mortgage rejection

‘The biggest problem for first-time buyers is that they are new to the experience, and they apply for mortgages not knowing what boxes they need to tick for a successful application,’ said Nick Morrey, product technical manager at John Charcol.

‘For example, they sometimes ask for loan sizes in excess of five times their salary, not realising there are strict limits on how much lenders are prepared to offer based on a person’s income. 

‘They may end up getting declined for that request, when they could have been accepted for a lower amount.

‘Another issue is they sometimes approach a lender that they are comfortable with like their own bank, when another lender would be much better suited to their particular circumstances.’ 

Many first-time buyers go on to be rejected multiple times, according to Aldermore’s findings.

More than two in five of those surveyed said they had been rejected more than once for a mortgage, while fewer than one in five had this same issue before the pandemic.

Why were first-time buyers denied a mortgage? 
Reason for mortgage application getting rejected March  2020 March 2021 
Poor credit history 19% 41% 
I didn’t have a large enough deposit  19%  39% 
Me/my partner was not on the electoral roll  13%  39% 
The lender made an administrative error  14%  35% 
I was self-employed, have irregular income or a contract worker  12%  33% 
I haven’t always lived in the UK  14%  31% 
I’d taken out a payday loan  12%  29% 
I’d made too many credit applications  14%  27% 
I had a large amount of debt  20%  26% 
Me/my partner were not earning enough  18%  25% 
Source: Aldermore Bank 

Challenges around credit history, deposit size and not being on the electoral roll were cited as the most common reasons for rejection.

‘The data shows that the pandemic has added to already challenging conditions for those trying to get on the housing ladder, but first-time buyers should not despair,’ said Jon Cooper, head of mortgage distribution at Aldermore.

‘Being declined for a mortgage, even though it can be a deflating experience, is not game over as options have broadened over the past decade.

‘It may feel daunting at times so we would recommend seeking advice from a mortgage broker that can give a whole-of-market view and provide options specific to a new buyers’ individual circumstances.’

Aldermore’s research shows that many prospective first-time buyers are now more likely to be rejected for multiple reasons, rather than just one.

Not being on the electoral roll, administrative errors by the lender and being a self-employed or contract worker were all reasons for rejection that had previously been much less of a hindrance last year.

For example, in March 2020, only 12 per cent of first-time buyers claimed that being self-employed or a contract worker resulted in them being turned down, but in March this year, 33 per cent cited it as cause of rejection.

This may have been down to lenders tightening their criteria during the pandemic.  

To make matters worse, getting rejected for a mortgage can negatively impact your credit history.

Once a full application is in motion, mortgage lenders tend to run a hard credit check to assess a borrowers’ financial history.

This leaves a footprint on their credit report that shows other lenders an application for credit has previously been made.

Too many hard credit checks over a short period of time can therefore impact a borrowers credit report and may make them appear as more of a risk to a lender. 

We spoke to Brian Murphy, head of lending at Mortgage Advice Bureau to find out how first-time buyers can avoid the main causes of rejection.

You have a poor credit history

A poor credit score raises alarm bells for lenders because they want to make sure you’re going to be a reliable borrower.

You can check your credit score and speak to a mortgage adviser about how to improve this.

But you can boost your credit rating by cancelling any unused credit cards, paying your bills on time, and checking if your credit score is linked to another person’s.

It will also help if you reduce or pay off any outstanding debt and keep your credit utilisation low, for example by staying well below your credit card limit.

You don’t have a large enough deposit

Lenders need to have confidence in your ability to manage your finances, and as part of this they’ll want to see you’ve managed to save for a deposit.

Saving for a deposit can often be the trickiest part of getting a mortgage, but there are schemes available to first-time buyers.

The new Government Mortgage Guarantee Scheme, for example, means buyers have access to 95 per cent mortgages, so they only need a 5 per cent deposit.

The interest rate may be slightly higher than if you were applying with a 10 per cent deposit, and it won’t be available for new builds, but if it is the difference between getting on the property ladder and paying no more rent, it could be worth it.

You are not on the electoral roll

Lenders need to confirm who you are and where you live, and they check this through the electoral roll.

If you’re not already on the electoral roll, this is something that can be very easily rectified – all you need to do is register.

It’s important to make sure that your electoral information is accurate and kept up to date, and it can also boost your credit score.

The lender made an administrative error

Unfortunately, this can happen from time to time: perhaps your surname is spelt incorrectly, or the lender has the wrong address.

To reduce any possible errors coming up in your application, make sure to always double or even triple check the information you provide to lenders as the smallest error, such as missing a digit off your house number, could cause a problem with your application.

And do the same for any documents the lender sends you in case it has also made a mistake.

If an error were to occur, your lender should be able to provide you with details on what the issue is.

You are self-employed, a contract worker, or have an irregular income

Getting a mortgage if you’re self-employed can be more challenging than if you’re on a company payroll, but it’s not impossible.

Unlike employed individuals that have a guaranteed income each month, self-employed people are deemed a little riskier because they are not seen to have a ‘regular’ income.

When applying for a mortgage, you’ll need to provide various documentation to help evidence your financial position.

This includes two or more years of certified accounts, tax calculations and tax year overviews, bank statements and proof of address.

If you’re a contractor, lenders may review your past and future contracts.

Either way, getting everything in order well in advance will help smooth the process.

You haven’t always lived in the UK

While there are not any specific legal issues for those without residency in the UK, you may face much more rigorous requirements to get your property purchase over the line.

Typically, lenders will want you to have lived in the UK for at least three years, have a UK bank account, and a permanent job in the UK, in order to consider your application.

They may also want to see your employment contract or visa, so be prepared to share that documentation.

Providing all of this information should enable you to get a mortgage just like any other UK citizen.


There are a number of ways to view your rating and history for free.

Experian and Equifax offer 30-day free trials of their service online, but you will need to remember to cancel before the end of the promotion to avoid subscription fees.

Checkmyfile also offers a free trial to check your reports with both Equifax and Callcredit.

Alternatively, you can request a snapshot excluding any score by requesting a statutory credit report online or by post at a cost of £2 from each agency.

Free credit report options can also be found by visiting Credit Karma and Clearscore.


You have taken out a payday loan

Payday loans raise a red flag to lenders because it suggests you may have had financial difficulty in the past.

If you can avoid them, it is always recommended that you do so as they’ll also be listed on your credit file for six years.

Think very carefully if you want to apply for a mortgage in the future as something like a payday loan, which may now be in the past and paid off, can still count against you.

Understandably though, this is not always possible and if you have taken a payday loan, speak to a mortgage adviser about your options.

You have made too many credit applications

Every time you apply for credit it is recorded on your credit report.

Applying for multiple lines of credit in a short space of time will be seen as a risk to lenders and could therefore affect your mortgage application.

Try and cover all your credit needs through one application, and if you are declined seek feedback on why this was before you apply for any future credit.

If you’re looking to take out a mortgage, it’s wise to avoid any credit applications in the 12 months prior to you starting your application.

You have a large amount of debt

Similar to payday loans, if you have run into debt in the past this will make banks wary of lending to you.

If you do have any outstanding debts, try to pay these off before applying for a mortgage.

It’s always best to seek advice from a mortgage adviser where you can explain your circumstances and they can help assist you in assessing your eligibility for a mortgage.

You or your partner were not earning enough

Your income is a key part of your mortgage application as it determines what you can and cannot afford in terms of mortgage repayments every month.

It can be a tricky one to get around due to strict lending rules, but there are other things you can do to boost your application.

For example, as well as your income, lenders will look at your outgoings and any debts you have, so try to avoid any big spending splurges in the months leading up your application.

Saving for a larger deposit could also help as it will reduce the overall loan you’ll be paying back.

Or if needs be, consider purchasing a less expensive property that will fit within your maximum loan limit.

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