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Help for Homebuyers Who Have Had a Mortgage Declined After Agreement in Principle

Can you be declined a mortgage after agreement in principle? Unfortunately, yes – if the lender or underwriter finds any aspect of the application unfavourable, you can have a mortgage declined after AIP.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2023-05-09
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Homebuyers Support For Post-Agreement Mortgage Decline

An agreement in principle, or AIP, is an initial approval for a mortgage based on your application. Can you be declined a mortgage after agreement in principle? Unfortunately, yes – if the lender or underwriter finds any aspect of the application unfavourable, you can have a mortgage declined after AIP.

This scenario can be stressful, particularly if you have proceeded with an offer based on the AIP and the amount the lender originally offered. Finding the right solution depends on why you have had a mortgage application declined after decision in principle.

In this guide, Revolution Finance Brokers explains some common reasons you might have a mortgage declined after 'agreement in principle' has been granted and what to do next.

Typical Reasons You Could Have an AIP Mortgage Declined

Lenders always have a set of policies and rules they refer to, and there are many reasons you could have a mortgage in principle declined, even if you had assumed your application was successful.

If your lender does not inform you why your mortgage decision in principle declined, be sure to request this information.

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AIP Mortgage Declined Due to Credit

AIPs involve a soft credit check, where the lender takes a quick look at your credit report. If the underwriter finds any more serious credit issues when conducting a hard assessment, they could decide to inform you that you have been declined for mortgage in principle due to your credit check.

That might be due to a past credit issue, such as a CCJ, or because you have had several defaults that don’t necessarily result in a low or negative credit standing but could mean having a mortgage in principle declined.

Mortgage Declined After DIP Due to Income

When you initially apply for a mortgage, the lender will assess your income, credit score, other assets, and outgoings to make a decision. During the final application, the underwriter will note any changes to your circumstances that mean you have a mortgage approved in principle then declined.

Examples include a reduction in your income, an increase in your outgoings, or recent bad credit issues.

Application Errors Meaning You Have a Mortgage Declined After AIP

Mistakes are more common than we might assume, and any incorrect figures, guesses or calculations can mean you have an AIP mortgage declined.

Can you be declined a mortgage after agreement in principle for an honest mistake? Potentially, yes – say you have stated the incorrect annual income or miscalculated your average self-employment earnings; this could impact the lender's decision.

Having a Mortgage Offer Declined Due to Suspected Fraud

If a lender has any reason to think the information is falsified or linked to money laundering or fraud, they will undoubtedly report that you have had a mortgage declined after DIP (decision in principle).

There may be nothing untoward, but an inconsistency, such as an irregularity or not reporting the source of your income, could mean automatic rejection.

Can I Have a Mortgage Declined After Offer Due to Lender Policies?

Mortgage lenders can revise their products, terms, or policies at any stage before the final agreement. In some cases, applicants are declined for mortgage in principle simply because the lender’s criteria have shifted since their original application.

Other Reasons You Might Have an Agreement in Principle Mortgage Declined

This list is not exhaustive, and there are several other reasons a lender could issue an outcome of a mortgage offer declined.

The key is to ensure you know the specifics because if one lender has declined mortgage after pre-approval, it is likely another will report the same outcome. As an independent, whole-of-market broker, Revolution can examine the justification behind your AIP mortgage declined and recommend the best steps forward.

Potential options might include:

  • Applying to a bad credit specialist lender if you have has a mortgage declined after offer in principle due to credit issues.
  • Choosing a lender with less stringent policies where a mortgage declined after AIP was due to lending rules specific to your original provider.
  • Correcting your application or addressing missing information to ensure a new lender will not issue a mortgage declined after ‘agreement in principle’.

We'll explain what to do if you've had a mortgage offer declined, but we always advise you to take a step back, avoid rushing into further applications, and unpick why your mortgage decision in principle declined to repeat this from recurring.

How to Manage a Mortgage Offer Declined After Decision in Principle

Thousands of applicants are declined mortgage after pre-approval, so you are far from alone if you are in this situation. In most cases, we can help clients secure a competitive mortgage regardless of why they have had an AIP mortgage declined.

Reapplying After Having a Mortgage Declined After AIP

We recommend waiting to reapply, whether to a different lender or the mortgage provider who issued a mortgage decision in principle declined letter. That is because, if you need clarification on the reasons, there is little assurance you won't have an AIP mortgage declined again.

Repeatedly having a mortgage declined after offer can impact your credit report and chances of future success, so this is not advisable.

If your lender has not informed you why you have had a mortgage offer declined after pre-approval or is not forthcoming with this information, we can help you understand the reasons to prevent the same outcome with a different lender.

Choosing the Right Lender After Having an Agreement in Principle Mortgage Declined

Picking the right lender is essential. An independent brokerage has a huge network of specialist, niche, and mainstream lenders. We can match you with the most suitable lender after having a mortgage offer declined.

For example, if you reapply to another lender with a similar policy, you'll likely have a second mortgage declined after AIP, which can be disheartening and potentially expensive.

Revolution consults with clients to determine the right lender for their circumstances and ensure they have the best possible chance of approval without having a further mortgage in principle declined.

Professional Broker Support After Having a Mortgage Declined After Offer

Our role is to assess your borrowing requirements, evaluate why a previous lender has issued a mortgage approved in principle then declined, and use our expertise, knowledge, and lending network to assess the ideal mortgage provider.

Services are always tailored to your needs, and we can negotiate and liaise directly with lenders to mitigate any potential further applications ending in a mortgage declined after DIP.

A whole-of-market broker isn't limited to one bank or a certain group of lenders and provides open access to hundreds of reputable mortgage providers, often with more flexible policies and less likelihood of returning a mortgage decision in principle declined.

What to Do If You Have a Mortgage Offer Declined After an Agreement in Principle?

Can a mortgage be declined after a decision in principle without a hard credit check? Yes, a lender may not necessarily have run a hard credit check, which remains on your credit report for any subsequent lenders to see.

Much depends on the reason you have been declined for mortgage in principle, and you might find it relatively straightforward to reapply elsewhere – especially if the reasons for the AIP mortgage declined relate to the lender's policies rather than your application.

Lenders might decide that you are declined for a mortgage in principle due to credit, your deposit, source of funds, affordability, age, income level, address history, the condition of the property or your evidence of earnings – but there are countless other scenarios that might mean you have a mortgage declined after DIP.

We recommend contacting Revolution Finance Brokers before you do anything else, ensuring you have professional, independent assistance with evaluating why your AIP mortgage declined and what the right solutions may be.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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