Reasons Why First-Time Buyers Might Be Refused A Mortgage


Research by Which? shows 41% of those between the ages of 18 and 24 have reported having their mortgage application denied at some point. So, why are so many mortgages being turned down? Is there anything you can do to improve your chances of being accepted? Find out why so many people are being denied mortgages, and what you can do to avoid it, below. 



Missed or late payments 

Life isn’t always predictable. There may not be enough money at the end of the month if several things go wrong, such as an unexpected car repair cost or forgetting to pay your energy bill during a stressful week. 

Payment delays have a negative impact on credit scores. Your financial responsibility is indicated by your credit score, which affects whether you are granted a loan. A late payment will remain on a credit report for six years. To determine whether or not to grant a mortgage, banks and other lending institutions check applicants’ payment histories. As a result, the odds of getting a mortgage with a low credit score are lower. 

What can you do? 

  • Don’t let yourself get behind on payments again by automating your bill and credit card payments with direct debits and by keeping track of when they’re due and whether or not there is a grace period.  
  • Create reminders to pay bills  
  • Avoid applying for more credit than you can pay back  
  • If you have a valid excuse for a late payment, such as job loss, you can ask credit reporting agencies to include a notice of correction in your report.  
  • Make every effort to raise your credit score. 



Mistakes or errors in paperwork 

The home-buying process requires a large amount of documentation. Annoyingly, even minor inaccuracies, like a misspelt name or inaccurate address, can lead to a mortgage application being turned down. Inaccuracies in your credit report can also cause you to be denied for a mortgage. 

We all like a good chuckle, but joking about payment references on bank transfers is strictly forbidden. Lenders for a mortgage could wonder what “thanks for last night” means and might not trust you if you say it was only a joke between you and your friend. 

What can you do? 

  • Don’t rush through paperwork; take your time, and double-check any financial information, such as your income and expenses, for accuracy. 
  • Verify your credit history with the three big credit agencies and ask them to correct any mistakes you find. (Experian, Equifax, and TransUnion.) 
  • When transferring money, ask that your friends write accurate payment references. 



No proof of consistent income 

It might be challenging to secure a mortgage if you can’t show proof of a stable, regular income. This is because mortgage companies need to know you can reliably pay your bills each month. (And yes, we know you’ve been paying more in rent than you’ll need to on your mortgage!) For this reason, conventional mortgage lenders may be less willing to work with self-employed borrowers and contractors. Lenders may consider you a high risk if you don’t have a regular source of income or employer. 

What can you do? 

  • Hire a mortgage broker, preferably one who specialises in helping self-employed and contractors. They’ll handle the entire process for you, from providing an explanation of your alternatives to assisting you in choosing the best mortgage. 
  • Collect documentation such bills, bank statements, and accounts to back up your claims of operational expenses. 
  • For the 12 months before applying for a mortgage, try not to take too many breaks and take on a continuous stream of work. 
  • If you want to prove your reliability as a freelancer, look for longer contracts and renegotiate agreements with the companies you’re already working for. 
  • Consider making a greater deposit or applying for a smaller amount. 
  • Think about joint or guarantor mortgage. 



Too many credit applications 

When you apply for a loan or other form of credit, the lender will look at your credit history to determine if you are a good candidate. In most cases, these inquiries will show up as “hard searches” on your credit report. 

Having multiple difficult searches in a short period of time can raise a red flag for lenders. A bad credit score can convey the impression that you have financial problems and are unable to keep up with your bills. It’s important to keep this in mind when preparing to apply for a mortgage, especially in the preceding six months. 

What can you do? 

  • Only apply for a mortgage if you have a decent credit score. 
  • Think about talking to a mortgage broker who can give you tailored advice. 
  • Try not to apply for any new loans or lines of credit right before applying for a mortgage. 



Not matching the lender’s profile 

While evaluating your mortgage application, lenders will use a variety of underwriting criteria and criteria. Several factors, including but not limited to age, income, job status, loan-to-value ratio, and property location, may be taken into account. 

What can you do? 

  • Contact an independent mortgage adviser to find out who is most suitable for you. 
  • Match your profile with appropriate lenders. 
  • Communicate with the lenders to identify their key interests. 



Need advice? Please contact our professional, friendly team. We’d be happy to help you without any obligation or pressure.