What should you do if your remortgage is declined?

A remortgage can be declined for several reasons: affordability, something on your credit file, an issue with the property or its valuation, or missing or inconsistent documentation. The first useful step is finding out, as far as the lender will tell you, which of these applied, since that shapes what you do next.

Common reasons a remortgage is declined

• Affordability. The lender’s calculation of your income against your outgoings did not support the amount you wanted to borrow, once a stress test was applied. Our guide on how lenders assess affordability explains what goes into this.
• Credit history. A CCJ, default, missed payment, mortgage arrears or a past insolvency can lead a specific lender to decline, even where the same history might be acceptable to a different, specialist lender.
• The property or valuation. A down valuation or an issue with the property, such as its construction type or leasehold terms, can lead to a decline or a lower offer than expected.
• Documentation. Missing bank statements, inconsistent income evidence, or gaps in self-employed accounts can hold up or end an application before it reaches a full decision.
• Existing lender criteria. For a product transfer, a lender can decide what it offers a customer who is in arrears or otherwise outside its normal criteria, separately from the wider affordability rules.

A practical order of steps after a decline

Could the credit file itself be wrong?

Before assuming the decline is final, check your free statutory credit report from Experian, Equifax and TransUnion. Genuine errors, such as a debt recorded twice or a default with the wrong date, do happen, and correcting them can change how a future application is assessed. If you believe something is inaccurate, you can dispute it with the relevant credit reference agency.

Should you use a broker after a decline?

A broker who specialises in adverse credit or the specific reason behind your decline can often identify a lender more likely to consider your situation, rather than you approaching lenders one after another. Our guide on whether you need a broker for a bad credit remortgage explains what a broker does and when it tends to help most.

What this means if your deal is ending soon

If your current deal is about to end and a remortgage has been declined, you are not necessarily stuck. A product transfer with your existing lender is a separate process from a full remortgage and, where you are not borrowing more, often involves less checking. Our page on product transfers with bad credit and our guide on what if you can’t remortgage when your deal ends set out the options if time is short. If your mortgage would otherwise move to the lender’s standard variable rate, it is worth understanding what that means for your payments while you sort out the next step.

A worked illustrative example

Suppose someone applies to a mainstream lender for a remortgage and is declined, an example for illustration only. On checking, they discover the reason given was an unpaid default from just over a year ago, alongside borrowing that would leave little room if the stress test rate applied. Rather than reapplying to a similar mainstream lender straight away, they check their statutory credit report to confirm the default details are accurate, then speak to a broker who works with adverse credit. The broker identifies a specialist lender whose criteria are more willing to consider a default of that age, and who assesses affordability slightly differently. The application to that lender succeeds, illustrating why understanding the actual reason for a decline, rather than repeating the same type of application, tends to lead to a better outcome.

Common mistakes after a decline

• Reapplying immediately without changing anything. If the same combination of income, outgoings and credit history caused the first decline, applying to a similar lender is likely to produce the same result while adding another hard search.
• Assuming a mainstream decline means no lender will help. Specialist and adverse credit lenders exist specifically because mainstream criteria do not fit everyone. Our page on remortgaging with a low credit score explains how this part of the market assesses applications differently.
• Not checking whether the valuation played a part. A down valuation can cause or contribute to a decline independently of your credit history, and it is worth confirming this was not the main factor before focusing only on credit issues.
• Leaving a credit file error uncorrected. If a genuine mistake, such as a duplicate entry or wrong date, contributed to the decline, it is worth raising a dispute with the credit reference agency before applying elsewhere.
• Not telling a new lender or broker about the previous decline. Being upfront about what happened and why allows a broker or adviser to target a more suitable lender from the outset, rather than repeating an application likely to fail again.

If money is tight in the meantime

A decline can be stressful, particularly if it happens close to your deal ending. If keeping up with your current mortgage or other bills is becoming difficult while you work through your options, free and impartial help is available from MoneyHelper, StepChange and National Debtline, and it is worth speaking to your current lender early rather than waiting.