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Can You Be Refused a Remortgage?

Lenders assess remortgage applications based on their policies and criteria, so they could reject an applicant due to credit issues, lack of affordability, based on the value of their property, or because there are any other risk elements.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2024-06-14
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What does it mean to be refused a remortgage?

If your selected lender turns you down for a remortgage, it can be worrying and disheartening. Can you be refused a remortgage for any reason? It is the lender’s discretion whether to accept your application, so yes, they can reject the remortgage if they wish.

The first step is to determine the reason and evaluate the next steps.

We’ll answer some of the commonly asked questions, including can I get a remortgage with bad credit, can you remortgage with a restriction, and can you be refused a remortgage – and why!

Reasons Why Your Remortgage Application Might Be Denied

Lenders assess remortgage applications based on their policies and criteria, so they could reject an applicant due to credit issues, lack of affordability, based on the value of their property, or because there are any other risk elements.

Can I get a remortgage with bad credit? You can, but if you've been turned down because of a low credit score, another mainstream lender will likely provide the same answer.

Note that, just like when you take out an initial mortgage, the lender will run through several assessments and checks, so they can decide to turn you down if you do not meet their criteria.

Can you remortgage with a restriction? Probably not; a restriction on a property prohibits you from selling, transferring the equity or applying for a new mortgage – although, depending on the terms, you might be able to remortgage with the same lender.

If one lender turns you down, can you be refused a remortgage by another? If the lender thinks you cannot afford the remortgage repayments, another provider may find the same problem with your affordability checks.

In this scenario, we strongly recommend contacting Revolution Finance Brokers for independent advice about adjusting your application or choosing a more suitable lender.

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Based on your yearly income,
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Most lenders will let you borrow 4.5 times your annual salary so, as long as you have a standard 10% deposit, you should be able to borrow this much.

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Depending on your personal circumstances, some lenders may let you borrow 5 times your salary.

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Lenders usually cap the amount they lend at 5.5 times your salary, so it’s unlikely you’ll be able to borrow more than this.

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Why Can You Be Refused a Remortgage?

A lender might decide to turn down a remortgage application for many reasons. Common reasons include the following:

  • Credit issues such as a CCJ or default within the last six years or recent late payments.
  • Multiple credit applications on your report in a short period.
  • Not being registered to vote or having mistakes on your application.
  • Lack of affordability to keep up with the repayments, or a variable income, such as being self-employed.

Can you be refused a remortgage for any other justification? If the lender doesn't feel you fall into their policy thresholds or doesn't wish to offer you a remortgage, they are not obligated to do so.

Can You Be Refused a Remortgage After an Agreement in Principle?

The agreement in principle is an initial offer that states what the lender will be willing to offer on your remortgage – they can withdraw this offer at any stage before completion.

If the lender hasn't explained what has changed or why they have decided not to offer a remortgage after an initial agreement, it's important to find out why so you can address their concerns on your subsequent application or when selecting a different provider.

Can I Get a Remortgage With Bad Credit?

Remortgaging with bad credit is possible, but we might suggest a specialist lender in some cases since most high-street banks and mainstream lenders are reluctant to lend to any applicant with an imperfect credit score.

However, while you can remortgage even with serious credit issues in your file, you’ll find that the interest rates and charges are higher than for a lower-risk remortgage applicant.

It may be easier to secure a bad credit remortgage than applying for a new mortgage since the equity you own in your home will somewhat offset the lender's perceived risk.

Can You Be Refused a Remortgage and Receive a Hard Credit Check?

If a lender refuses your remortgage outright, then they won’t likely have run a hard credit check, so the application will not appear on your credit report. If the lender has rejected the application at the final stage, they have likely uncovered past credit issues on your report, in which case their search may be visible to other lenders.

Can I Release Equity When I Remortgage?

Having equity in your property improves your chances of securing a remortgage, regardless of your credit report, because if you default, the lender has a better chance of recouping the outstanding debt by selling your property at a below-market liquidation value.

However, can you be refused a remortgage if you have equity? You can – if the equity isn't sufficient to make the application viable for the lender, or if there are other unrelated issues, they may still turn you down.

Do I Need a Deposit to Remortgage, and Will it Improve My Prospects?

There are various fees associated with remortgaging, but you won’t normally need a deposit. If you have been refused a remortgage, adding a deposit might make securing the borrowing you need easier, but this isn't a common requirement.

Remortgaging fees tend to include legal costs, arrangement charges and brokerage fees. As long as you aren't looking to borrow above the lender's LTV threshold and don't have any other adverse circumstances, a deposit won't typically be necessary.

Can I Remortgage to Consolidate Debt?

If you’ve had a remortgage rejected due to other debts (calculated as part of your debt-to-income ratio), it could be worth considering a debt consolidation remortgage.

Can I remortgage to consolidate debt depends on what your property is worth, what you owe on your current balance, and the total sum of all other debts, such as personal loans or credit cards.

Debt consolidation remortgages mean you increase the mortgage borrowing to repay everything else and have one monthly repayment sum at a lower interest rate. However, because mortgages tend to run longer, the total you pay back could be higher.

Can You Remortgage in a Fixed Term?

It's not often advisable to remortgage in a fixed term because most lenders will have a contractual clause that says you need to pay an early settlement fee to exit the agreement before the fixed period ends.

Can you remortgage in a fixed term and be turned down? Yes, the lender could perceive that you cannot meet their affordability requirements when combined with the extra costs of paying an early exit charge.

Can You Remortgage With a Restriction?

A restriction sets limits on what you can do with your property, including selling it, transferring the equity, or applying for a new mortgage product. Can you be refused a remortgage due to a restriction? You can indeed.

The best action in this circumstance is to speak with an experienced, independent broker to work out how to proceed or whether there are any opportunities to remove or amend the restriction.

Whatever the reason for being refused, our knowledgeable team can work with you to assess the causes, determine the most viable way forward, and provide independent guidance to ensure you make informed choices.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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Frequently Asked
Questions

If a lender turns you down for a remortgage, they should tell you why. If not, you should be able to get in touch and ask for a little context to explain why the lender didn't think your remortgage application was suitable or what the problem was.

Yes, but it's important to select your lender carefully since rules and policies around bad credit lending vary considerably between remortgage providers. Some lenders will not offer any bad credit applicants a remortgage, whereas niche lenders are far more flexible.

If you have enough equity in your property and want to remortgage to increase the balance, you can release equity to pay for other things, such as buying a car or financing home improvements.

You can – you will need to remain beneath the maximum LTV your lender offers, and they may ask for details of your other debts before agreeing to a debt consolidation remortgage. However, repaying other high-interest short-term debts can be a good way to reduce your monthly payments to a manageable level.

Possibly, although it may not be wise, depending on the terms of your current mortgage agreement and whether you will need to pay early exit penalties if you decide to leave before the fixed period ends.

Not usually, although there could be opportunities to remortgage or apply for a mortgage transfer with the same lender if you believe your mortgage costs are higher than average or there are other more suitable products with a lower interest rate available.

Usually, you wouldn’t need to offer a deposit, and the equity in your property would act in place of a deposit. However, if your application is higher risk, offering a deposit could make it more likely that a lender will accept your remortgage application.

No, you don't have to remortgage, but you'll likely switch to the lender's SVR, which is typically one of the highest interest rates you will pay. It is usually possible to save costs by remortgaging onto another product, whether as a fixed term or another offer such as a variable tracker rate.

It would be difficult to remortgage if you have no income, but it could be possible if you otherwise have the wealth to cover your remortgage payments and the lender considers them valid. Examples include dividends from a company ownership share or regular income from a trust.

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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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