I had a mortgage application rejected, so how can I get one accepted?

I’m looking to buy my first home but I’ve been turned down for a mortgage before. 

I’ve heard that applying too many times can look back on your credit record. 

My credit score is already poor and I’m afraid if I’m declined again, it will only get worse. 

What are my options? 

If you have a poor credit history or are in lots of debt your mortgage options can seem limited

Will Kirkman of This is Money replies: There are plenty of horror stories of mortgage providers rejecting applications for ridiculous reasons, such as for seeing a swear word on a bank statement.

In reality this doesn’t happen very often, but if you have a poor credit history, have used payday loans or are in lots of debt, your options can seem limited.

This is a real worry for many trying to get onto the housing ladder – research from Compare The Market found recently that nearly a third of the public don’t think they would be eligible for a mortgage.

But seven out of 10 admit to never having tried to improve their credit rating in order to boost their chances of getting approved.

Making small changes, such as taking out a credit card, spending a little on it regularly and paying off the debt in full each month, registering on the electoral roll, paying off debts or saving more regularly can greatly increase your chances of success.

We asked two mortgage brokers for their advice on what to do next. 

Nicholas Morrey, of broker John Charcol, replies: It is worrying that so big a proportion of the population thinks they are ineligible for a mortgage without even speaking to a broker. 

Many are unaware that being declined for the amount they want to borrow and being declined for any borrowing are not the same thing.

Also, they may not be aware that being declined by one lender does not mean automatic declines from all lenders.

A declined application by one lender doesn't mean all lenders will automatically decline you

A declined application by one lender doesn’t mean all lenders will automatically decline you

Here are some ways to improve your chances of getting accepted: 

Get registered on the electoral roll – preferably with three years’ address history. Contact your council and ask them to update their records and if you do move in that time make sure you notify the council of the changes.

Nicholas Morrey of broker John Charcol 

Nicholas Morrey of broker John Charcol 

Get all your bills, loans and credit cards on direct debit for at least the minimum payments. This stops any credit commitment from being even one day late, which is often recorded on your credit file as missed even if late by 24 hours.

Do not take your outstanding balances on cards to the full amount. Lenders look at the amount of outstanding credit and the amount of available credit to see how much you use short-term credit finance.

Ask lenders if their systems do a ‘decision in principle’ that performs a ‘soft credit search’. If not then you are leaving hard credit footprints on your file for other companies to see and too many of those can have an impact on future lending decisions.

Don’t get despondent if the first lender you try says no to what you want.  Would they lend you money – just not the amount? Lenders will only go to a general maximum of four and a half times income, with some slight exceptions, so asking for eight times income is going to be rejected out of hand.

A good broker should be able to look at your overall scenario and suggest why you may have been declined. They should also know which lenders do not credit score with an automated system, which may help.

Lastly they can give hints and tips on how to improve a credit file so that in the future an application is more likely to be acceptable. So before getting lots of applications declined – talk to a broker. 

Tell them everything that has happened and provide copies of your credit reports from either/both Experian and Equifax as it is those reports that nearly all lenders look at.

Andrew Montlake, of mortgage broker Coreco, adds: While there is a lot of coverage around the difficulties that some people may have securing a mortgage, this mainly refers to the high street lenders. There is a whole world of specialist lenders and smaller building societies that are keen to lend to those who may not quite fit the tick-box mentality of the high street banks and building societies.

Andrew Montlake of mortgage broker Coreco

Andrew Montlake of mortgage broker Coreco

There are now a wealth of options for those who are self-employed, have had some mild credit issues or have complex income or property requirements.

It is true that affordability tests have made things tougher, but people should not discount their chances until they have spoken to a professional adviser who can speak about the wider market.

The options are out there for many, you just need to know where to look. 

Will Kirkman of this is Money replies: When applying for a mortgage It usually pays to have a look at a few different mortgage providers to ensure you’re getting the best deal.

You can do this yourself either by going directly to each lender or you can use This is Money’s mortgage finder tool which allows you to search for the lenders that offer Help to Buy remortgages.

It’s always a good idea to speak to a independent adviser when making big financial decisions.

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