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17th December 2020

A third of first-time buyers have experienced mortgage rejection

A third of first-time buyers have been turned down for a mortgage with those who are self-employed or experiencing credit problems finding it the most challenging, according to research from Aldermore bank. The study reveals first-time buyers feel disheartened about the home buying process, especially during these uncertain times, with three in five (62%) stating that buying a home feels unachievable.

More than one third (35%) of people looking to buy their first home say they have been rejected once for a mortgage with 10% enduring rejection on more than one occasion.

Aldermore bank’s First Time Buyer Index surveyed 1,000 prospective first-time buyers in August 2020 and found that nearly two-thirds (62%) felt buying a home was less achievable in current economic conditions.

The most common reason given for rejection was that the applicant was self-employed or a contract worker which accounted for 20% of respondents. Not having a big enough deposit (18%), insufficient income (16%) or having a poor credit history (15%) also featured highly.

A third (34%) of people questioned said they were looking to improve their credit score by paying bills on time, paying off debts or registering on the electoral roll while some had also given up their self-employed status because they felt this might give them a better chance of securing a mortgage.

Nearly a quarter (23%) of first-time buyers were said to be worried about their credit history and a third (34%) are currently actively looking to improve their score.

Being self-employed or having credit problems can hinder your chances of getting a mortgage, but there are lenders who specifically target creditworthy borrowers who do not meet high-street lenders’ criteria. As a whole of market mortgage broker, we have extensive expertise in assisting people overcome challenges to secure a mortgage deal. We have access to specialist lenders who handle more complicated applications which means your past credit issues or self employed status may not be such a significant barrier to buying a home.

Specialist lenders might say yes when others have said no as they will consider borrowers with CCJs, defaults and other credit issues. It is likely you will need to pay a higher rate initially but making all your mortgage payments on time will improve your credit rating making it easier to get a better rate in the future.

If you’re a first time buyer and have been rejected previously or know you have a poor credit score, contact us for free initial, no obligation mortgage advice. We will give you a whole of market view and provide options specific to your individual circumstances.

Do you have complex needs?
Self employed or history of credit problems?
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