Understanding the Decline
Being declined for a mortgage is frustrating, but it's not the end of your homeownership journey. The key is understanding why you were declined and addressing those specific issues before trying again.
You're not alone
Stages of Decline
Agreement in Principle (AIP) Decline
Often credit-related. The lender's automated system flagged something in your credit file or basic details didn't meet criteria.
Full Application Decline
Could be documentation, affordability, or property issues. The underwriter reviewed your full application and found a problem.
Post-Valuation Decline
Usually property-related. The survey revealed issues with the property that made it unacceptable security for the loan.
Common Decline Reasons for Self-Employed
1. Insufficient Trading History
Lender required 2-3 years of accounts, but you only had 1 year.
Fix: Find lenders with shorter history requirements, or wait until you have longer trading history.
2. Income Assessment Too Low
Lender's calculation method gave lower income than expected, failing affordability.
Fix: Find lenders who use more favorable calculation methods (e.g., share of profit instead of salary + dividends).
3. Documentation Issues
Accounts weren't certified by qualified accountant, SA302s missing, or figures didn't match.
Fix: Get proper documentation — certified accounts, matching SA302s, clear paperwork.
4. Declining Income Trend
Latest year showed lower income than previous years, raising sustainability concerns.
Fix: Wait for improved figures, find lenders who average years, or provide explanation for the dip.
5. Credit Issues
Problems on credit file — defaults, CCJs, missed payments, or too much existing debt.
Fix: Check credit report, dispute errors, pay down debt, allow time for issues to age.
6. Complex Business Structure
Multiple companies, complex shareholdings, or unusual income sources that the lender couldn't assess.
Fix: Use specialist lenders/brokers who handle complex cases, or simplify the application.
Get the real reason
What to Do Next
Immediate Steps (First Week)
- 1.Don't panic or apply elsewhere immediately
Multiple applications create multiple credit footprints, which can make future applications harder. Take time to understand what happened.
- 2.Get details on why you were declined
Ask the lender (or broker) for specific reasons. Was it credit, income, documentation, or the property?
- 3.Check your credit report
Get your full report from Experian, Equifax, and TransUnion. Look for errors, unknown accounts, or issues you weren't aware of.
- 4.Review your documentation
Were your SA302s correct? Did your accounts match? Was anything missing or confusing?
Assessment Steps (Next 2-4 Weeks)
- 5.Consult a specialist broker
A broker experienced with self-employed mortgages can often identify why you were declined and suggest alternatives.
- 6.Review your income calculation
Did the lender use the most favorable method? Could a different lender assess your income more generously?
- 7.Consider the property
If declined after valuation, was there a property issue? Some properties (non-standard construction, short lease) are harder to mortgage.
Fixing Common Issues
Credit Issues
- • Errors: Dispute incorrect information with credit agencies
- • Missed payments: Time heals — older issues have less impact
- • High utilization: Pay down credit card balances to under 30%
- • Unknown accounts: Investigate and resolve any surprises
- • No credit history: Build credit with a credit builder card
Timeline: 1-6 months depending on issue
Income Assessment Issues
- • Low calculated income: Find lenders with better calculation methods
- • Declining income: Wait for better figures or find averaging lenders
- • Too tax-efficient: Consider income extraction changes for future years
- • Complex structure: Simplify or use specialist lenders
Timeline: Days to 12+ months depending on approach
Documentation Issues
- • Missing SA302s: Download from HMRC or request by phone
- • Unqualified accountant: Get accounts certified by qualified accountant
- • Figures don't match: Work with accountant to reconcile
- • Incomplete records: Gather all required documents before reapplying
Timeline: 1-4 weeks typically
Affordability Issues
- • Too much existing debt: Pay down loans/credit cards
- • Loan amount too high: Consider smaller mortgage or cheaper property
- • High commitments: Reduce monthly outgoings where possible
- • Larger deposit: Increase deposit to reduce loan amount needed
Timeline: 1-12 months depending on changes needed
Your Next Application
1. Use a Specialist Broker
After a decline, a broker adds significant value. They can identify lenders with different criteria, perform soft searches (no credit impact), and help present your case more effectively.
2. Target the Right Lender
Don't just apply to another random lender. Specifically select one whose criteria you're confident you meet, based on understanding why you were declined before.
3. Prepare Stronger Documentation
Over-prepare this time. Have all documents ready, organized, and checked. Consider a summary document explaining your situation clearly.
4. Consider Timing
Apply when your situation is strongest — after credit issues have aged, after better accounts are available, when you have your best documentation ready.
5. Be Honest About the Decline
Don't hide a previous decline. Brokers and lenders can often see previous searches. Being upfront allows them to address potential concerns proactively.
Declines aren't permanent
Get help after a decline
Connect with specialists who understand self-employed mortgage challenges and can help you succeed next time.
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