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Mortgage Denied: Here’s What to do Next

mortgage deniedHave you ever had your mortgage denied? Picture this: you and your partner have your heart set on buying your first house. You have scrimped and saved to have enough for a 25% down payment. Now, you are ready to work with a mortgage broker capable of finding you the best deal. Then it hits you like a ton of bricks: …mortgage denied.

What do you do next?

Mortgage denial is an awfully tough pill to swallow. It is especially tough for people who believe they have done everything right. It can be devastating enough to discourage someone from continuing to pursue the dream of home ownership. But what if you still really want to buy a house?

Here are some things you can do next if you have your mortgage denied. 

Mortgage Denied: Here’s What to do Next

There are right and wrong ways to respond if you have your mortgage denied. Do things the right way and denial doesn’t have to be the end of the story for you. In fact, it can be the start of something very big and profitable. Below is an explanation of what to do next.

Do Not Panic if Your Mortgage is Denied

First and foremost, do not panic. There are lots of different reasons lenders decline mortgages. Some of those reasons include: 

  • issues with your appraisal
  • change of employment
  • additional debts are incurred

These are just a few and the reasons can amount to nothing more than minor oversights that can easily be corrected. The fact is that being denied a mortgage is not the end of the world. There are almost always ways to fix whatever problem triggered the denial.

Along with not panicking, you should try not immediately giving up and assuming you will never be able to get a mortgage. This is because nothing could be further from the truth. Instead, pull up your socks and figure out what your next step is, then get to work.

Related: 4 Ways to Buy Your Next House Without a Mortgage

Ask for a Written Explanation

The next step is to request a written explanation from the lender who denied your mortgage application. So, after you take a couple of deep breaths and commit to not panicking, you will be able to get to this step. In some countries, lenders are required by law to provide that explanation along with the notice of denial. Other countries only require banks to provide an explanation upon request.

In either case, you need to know why you were denied. This information is necessary in order to go about addressing whatever the problem is. It could be something extremely minor, like a lack of voter registration. Yes, you read that correctly. In the UK, one of the know your customer (KYC) rules requires banks to check voter registration rolls to confirm borrower identity. If you are not a part of the voter registration, a lender cannot confirm your identity. This will likely result in mortgage denial. 

You might also find that your mortgage has been declined due to the fact that you:

  • do not earn enough money
  • have a poor credit history
  • are currently carrying too much debt
  • have a history of utilizing payday loans
  • have past court judgments on your record
  • are self-employed and cannot verify your income
  • have too many credit applications on your record`

Every reason the lender gives for declining your mortgage can and should be addressed. The sooner they are addressed, the sooner you will be in a position of being able to get a mortgage.

Don’t Immediately Apply Again

If your reason for the decline was either a lender administrative error or your lack of voter registration, feel free to correct the mistake and reapply with the same lender. However, for all other instances, DO NOT just turn around and go to a new lender and apply again. You shouldn’t do this because this adds yet another credit application to your history.

Too many credit applications can just:

  • make it harder to borrow
  • give lenders the wrong impression about your borrowing ability

Lenders may start to think you are looking for anyone to lend you money even though you really cannot afford to borrow. It can just make things harder for you. You may be better off waiting for a year or two. Taking the time to fix whatever problems you have and trying again can be helpful.

Straighten out Your Finances

Truth be told, most people who experience a mortgage decline for reasons other than administrative errors and lack of voter registration are in a bad position financially.

They may have:

  • a poor credit history
  • not enough income
  • a combination of both

Many of them can be late paying their bills.

If you find yourself in this sort of position, the absolute best thing you can do for yourself is to straighten out your finances.

  • Trim your budget so it is as lean as possible.
  • Take on part-time work in order to pay down your debt.
  • Do everything you can to make sure your bills are paid on time and that you are actively reducing the amount of money you owe.

Over a couple of years, you can turn a terrible credit history and score into something stellar. Then, you will not only be in a better position to get a mortgage, but you’ll also be in a better position for great rates and terms.


There are lots of reasons lenders decline mortgages. If you are ever declined, don’t panic. Find out what the problem is and do what you can to fix it. If you are willing to put in the time and effort, you will eventually overcome whatever led to the decline.

If you or someone you know has had their mortgage denied, has this information been helpful for your situation?


AUTHOR LaTia Longuemire

My name is LaTia Longuemire. I enjoy writing, singing, and cooking in my spare time. My passion is helping others. At this stage in my lifetime, I'm primarily focused on my children. They are everything that keeps my world spinning.

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