What To Do If Your Mortgage Is Rejected On Affordability

What is an affordability check?

An affordability check is an assessment that a mortgage lender conducts to work out how much they’re willing to lend you on a mortgage loan. A lender will do an affordability check after either you or your mortgage broker submit your mortgage application to them. 

The amount you can afford to borrow on a mortgage depends on a few different things:

• How much you earn

• What your outgoings are

• Your deposit amount

All these things will determine the amount a mortgage lender is willing to lend you. The requirements will also depend on your circumstances, for example if you’re self-employed, or have bad credit. 

You can get an idea of how much this would be using our Mortgage Calculator. 

Before borrowing any amount, make sure you work out what kind of monthly mortgage repayments you can afford. A general rule is that your mortgage repayments shouldn’t be more than 30% of your take-home salary. 

An important step before getting a mortgage is working out the total cost of homeownership. If it looks like your mortgage payments will be up to 40% or even 50% of your take-home pay, you could consider getting a smaller property and mortgage.

Why might my mortgage be rejected on affordability?

Mortgage providers need to be sure that you can afford your monthly mortgage repayments without struggling. If your mortgage is declined on affordability, it can be down to a few things:

You don’t have enough income 

The biggest reason your mortgage application might fail affordability checks is because your salary doesn’t stretch far enough. Most mortgage lenders will let you borrow up to 4.5 times your salary (known as an income multiple). 

But not all lenders do things the same way. Some specialist lenders offer higher income multiples than others, so if you’ve been rejected because of this, it’s worth speaking to a broker to see what they can do. 

Your outgoings could be too high

When you apply for a mortgage, lenders look through your bank statements to see how much you have left after all your monthly financial commitments go out. 

If you have heavy outgoings, it can impact your chances of securing the mortgage you need as a mortgage lender may decide you can’t afford the repayments.

The lender won’t take your total income into account 

If you’re someone who relies on multiple sources of income such as bonuses or investment income, not all mortgage lenders will accept this as it may fall outside of their criteria.

Specialist mortgage lenders know how to deal with the tricky stuff, and if you pull all your sources of income together, you could get the amount you need to borrow.

The lender is worried that your circumstances might change

When affordability checks are done, they’re not just looking at your current income, they’re looking at whether it will change in the future. If they think that your circumstances are unsustainable and your ability to make repayments isn’t promised, then you may face rejection. 

Every lender is different, and specialist lenders are much more likely to be flexible to your current and future circumstances. 

What can I do if my mortgage is rejected on affordability grounds?

Although affordability is based mostly on your income, there are some things you can do if your mortgage is rejected because of affordability. The most important thing you can do is to stay calm, and ask for details on why you were rejected to see if there’s anything you can do. 

Pay down any debts

Lenders will want to know if you owe any money to other creditors. They’ll take that into account to determine your affordability. The more money you owe, the less they’ll be willing to let you borrow. 

Improve your credit score

The higher your credit score, the more a lender will likely lend to you. A higher credit score indicates to lenders you’re good with paying back debts or credit. But a low credit score doesn’t necessarily make a mortgage impossible.

Read our guide: How to improve your credit score.

Watch your spending 

Lenders will look at your income but also your outgoings to determine affordability. If you regularly spend large amounts of money or run out of money, lenders will take that into account. 

Think about your income

It’s easier said than done, but if you’ve got a promotion or pay rise coming up, that will improve your affordability and mean you’re less likely to be rejected. If you’re currently a temporary or fixed-term contract employee, it would be helpful if you could negotiate a permanent contract. But if this is impossible, don’t worry, it might help if you can speak to a specialist. 

Speak to a specialist 

Sometimes, the computer just says “NO”. High street banks and mainstream mortgage lenders use automated decision-making, and if you don’t fit into neat boxes then your mortgage will usually get rejected. When considering income multiples, or different types of income, it’s definitely worth speaking to a specialist mortgage broker - like us! 

We have relationships with specialist lenders who exist to understand complex circumstances and try to figure out the best deal for you.