What to do if your mortgage application is declined by Halifax

If Halifax declines your mortgage application, don't panic. It could be easier than you expect to be approved the second time around.

Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

Halifax is one of the most popular mortgage providers in the UK, not least because of its range of mortgages aimed at first-time buyers and applicants with low incomes.

It will also consider applications made via the government’s Help to Buy or Right to Buy schemes as well as shared ownership deals.

Still, even if Halifax declines your mortgage application, this doesn’t mean all hope for buying your property is lost.

In fact, it may be simpler than you think to have your application approved the second time around.

Below, we explore the common reasons why Halifax may have declined your mortgage application and what to do if this has happened to you.

Why did Halifax decline my mortgage application?

It is rare for a mortgage lender to reveal why your mortgage application was declined, but it is worth asking Halifax staff whether they can share any information about this. Failing that, consider seeking advice from your mortgage adviser.

Here are some of the most common reasons why lenders decline mortgage applications.

  • Affordability concerns. As part of your mortgage application, your mortgage lender will seek information about your annual income and regular outgoings. It will also check your recent bank statements. Using this information, it will determine the likelihood of you falling behind on your mortgage repayments. Lenders tend to be particularly strict when conducting these affordability checks on self-employed and contract workers because their income tends to be less consistent.
  • A poor credit score. Your credit score is a numerical indicator of your reliability when it comes to paying debts and bills on time. It is based on the financial transactions filed on your credit report. The higher your credit score, the easier you should find it to be approved for a mortgage. However, even those with high credit scores can be automatically declined if certain “red flags” appear on their credit report. Some mortgage providers, for example, will refuse to lend to individuals who have CCJs, IVAs or bankruptcies.
  • You’re ineligible for a particular mortgage or property type. All lenders will set non-financial criteria for you to meet in order to be eligible for specific mortgages. This could concern (but is not limited to) your age, occupation, residency status and the type of property you’re trying to buy. Most lenders will list their non-financial eligibility criteria on their website.
  • Administrative errors. If you have listed incorrect information on your application or failed to provide the correct documents, this could be reason enough to decline you. You should also check your credit report for errors and ensure that your correct name and address is listed on the electoral roll.

Check Halifax’s minimum lending criteria

When checking your eligibility for a Halifax mortgage, your first port of call should be its mortgage affordability calculator.

This will provide an estimate of how much you may be able to borrow from Halifax for a mortgage, based on your income, outgoings and the value of the property you’re buying. You’ll typically be afforded between four and five times the total annual income of all applicants. There’s also a table on the Halifax website showing the exact multiplier you’ll be eligible for, based on your income and the loan-to-value of your desired mortgage.

You should also check Halifax’s non-financial lending criteria. Its website includes criteria for age, suitable documentation, income sources, property condition and more.

For example, all applicants must be at least 18 years old to successfully apply for a Halifax mortgage. They can be no older than 80 at the end of the mortgage term. Halifax says it will assess all mortgages for non-traditionally structured buildings on a case-by-case basis, although its website also has a list of building types that will not be considered.

Check for more suitable mortgages

Halifax offers mortgages for those with a low deposit (quite how low changes over time). However, it can be easier to be approved for a mortgage with a lower loan-to-value, provided you have the funds available to put down a larger deposit.

If you don’t have additional funds available, investigate whether a Help To Buy or shared ownership mortgage is suitable for you. Both schemes allow you to be approved for a mortgage while borrowing less money.

If you believe you were previously declined because of a poor credit score, you need to spend some time building your score or apply with a lender that specialises in bad credit mortgages.

Speak to a mortgage broker

Mortgage brokers can point you towards the best mortgage deal for your circumstances and help you submit the correct documents for your application.

They have specialist knowledge of individual lenders’ eligibility criteria, meaning they’ll be able to identify why you may have been declined in the past and suggest what you can do to get a mortgage for your new home.

Don’t reapply straight away

When you apply for a mortgage or any other type of loan, your credit score drops slightly. This makes it harder to be approved for a mortgage immediately after being declined for one.

It is therefore often recommended to spend a couple of months rebuilding your credit score before reapplying for a new mortgage. A mortgage broker will be best placed to suggest whether this is a good idea for you.

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