Problems getting a mortgage
This content applies to England only.
Housing laws vary between England and Scotland. This page applies to England only. Get advice relating to Scotland
In certain cases it may be difficult to get a mortgage, for example, if you are self-employed or have had debt problems in the past. You might also be turned down if there are problems with the property. A specialist lender may still be able to help you.
What if I have no money for a deposit?
Most lenders are unlikely to lend you 100 per cent of the value of the property, even if you could afford the repayments. Most big high-street lenders will lend up to 90 or 95 per cent, though if you borrow above 90 per cent you may have to pay for mortgage indemnity guarantee insurance through the lender (which could cost you several hundred pounds).
If the lender will not lend you as much as you need, you may be able to get a top-up loan from an insurance company or bank, but you should be very wary of overstretching your finances in this way. And if you borrow 100 per cent of the value, you run a greater risk of negative equity (where your home is worth less than what you owe) if property prices fall.
Can I get a mortgage if I'm self-employed?
If you are self-employed or have an irregular income, you will usually need to provide the lender with accounts for the last three years. You may need to go to a mortgage broker to find a lender who specialises in borrowers in your situation, rather than use a high-street lender. You may also have to find a larger than normal deposit.
A mortgage offered without proof of your income (or previous mortgage borrowing) is sometimes called a non-status mortgage.
Can I get a mortgage if I'm near retirement?
Some lenders may be concerned that you won't be able to keep up the payments once you stop work but a broker may still be able to help. You may have to pay off the mortgage in a shorter time (which will mean higher monthly payments).
Can I get a mortgage if have a poor credit record?
After you apply, the lender will usually run checks with credit reference agencies for any history of bad debts or repossessions of property you have previously owned. If you're in doubt, you should check what information the main credit reference agencies, Experian and Equifax, hold on you. If you have a poor credit record (an 'adverse credit rating'), a specialist broker may still be able to find you a lender.
Can I get a mortgage if I have a low income?
If you are on a low income, a home ownership scheme (such as shared ownership) may be a possibility. These are run by some local councils and housing associations. You may be able to get a loan to buy the home you currently rent or buy a share of another property and pay rent on the remaining share. Usually you have the right to buy the remaining share if and when you can afford to.
What if there are problems with the property?
You may hit problems with the lender if the property you want to buy is:
- in poor repair
- leasehold with only a few years left on the lease
- not a typical house or flat (for example, it's a flat over a shop)
- built of unusual materials, rather than brick and tile.
For properties like this, ask a mortgage broker which lenders are most likely to accept your application. You may have to pay a slightly higher than average rate of interest.
What can I do if I'm turned down?
This may be because of your income or employment status or because of problems with the property, as described above. It may be worth applying again to a different lender, though you may have to tell them that your previous application was refused.
If the problem is a bad debt registered with a credit reference agency, you should double check that the agency's details about you are correct. If you can prove that they are not, you can get the agencies to correct your record and inform the lender that there was a mistake.
If you think you have been treated unfairly by a mortgage broker or lender, you can make a formal complaint. The firm should have a complaints procedure.
