Problems getting a mortgage

This content applies to Scotland only.

Housing laws vary between Scotland and England. This page applies to Scotland only. Get advice relating to England

In certain cases it may be difficult to get a mortgage, for example if you are self-employed or have had debt problems in the past. You might also be turned down if there are problems with the property. A specialist lender may still be able to help you.

What if I have no money for a deposit?

Most lenders are unlikely to lend you 100% of the value of the property, even if you could afford the repayments. Most big high street lenders will lend up to 90 or 95%, though if you borrow above 90% you may have to pay for mortgage indemnity guarantee insurance through the lender, which could cost you several hundred pounds.

Remember the 'value' is what the lender's valuer thinks the property is worth, and this may be less than the purchase price. For example, if you are bidding £105,000 for a property worth £100,000 and your lender will only lend you 90% of the value (£90,000), you'll need to come up with £15,000 for a deposit.

If the lender will not lend you as much as you need, you may be able to get a top-up loan from an insurance company or bank, but you should be very wary of overstretching your finances in this way. In addition, if you borrow 100% of the value, you run a greater risk of negative equity (where your home is worth less than what you owe the mortgage lender) if property prices fall.

Can I get a mortgage if I'm self-employed?

If you are self-employed or have an irregular income, you will usually need to provide the lender with accounts for the last three years. If you cannot provide this information you may have to get a non-status mortgage . Non-status mortgages are usually given to people who have credit problems, have no credit history, or cannot verify their income. Most high street lenders do not offer non-status mortgages, as they believe that there is more risk of the repayments not being met. You may need to go to a mortgage broker to find a lender who specialises in borrowers in your situation, rather than use a high-street lender. You may also have to find a larger than normal deposit and pay higher interest.

Can I get a mortgage if I'm near retirement?

Some lenders may be concerned that you won't be able to keep up the payments once you stop work, but a broker may still be able to help. You may have to pay off the mortgage in a shorter time (which will mean higher monthly payments).

Can I get a mortgage if have a poor credit record?

After you apply, the lender will usually run checks with credit reference agencies for any history of bad debts or repossessions of property you have previously owned. If you're in doubt, you should check what information the main credit reference agencies, Experian, Equifax and Callcredit hold on you. If this information is not correct, their websites tell you what to do to get it put right. In addition, there may also be things you can do to improve your credit rating - check the credit reference agencies' websites to find out more.

If you have a poor credit record (an 'adverse credit rating'), you may be able to get a non-status mortgage (see above) or a 'sub-prime' mortgage, with higher interest charged. However, it is now becoming very hard to get a mortgage if you have any problems with your credit history.

Can I get a mortgage if I have a low income?

Shared ownership

If you are on a low income, a home ownership scheme such as shared ownership may be a possibility. Shared ownership schemes are usually operated by housing associations and allow you to buy a share of the value of a property (for example, 25%) whilst paying a lower rent to the housing association. Usually you have the right to buy further shares if and when you can afford to until eventually you own the house outright.

Right to buy

If you rent from the council or a housing association, you may have the right to buy your home at a discounted price.

Getting a guarantor

You may be able to get a mortgage if you can find a guarantor. If you default on your mortgage, the guarantor will be responsible for making the payments, so it isn't something to take on lightly. The lender will check that the guarantor would be able to afford the payments should this happen.

Can I get a mortgage if I'm disabled?

You may find it more difficult to get a mortgage if you are disabled and will be including benefits in your income but it may still be possible. If you are receiving or are eligible to receive income support or jobseeker's allowance, you could be entitled to help with paying your mortgage interest.

Can I get a mortgage if I'm a student?

Some lenders offer special mortgage packages for students. However, you will probably need a parent or guardian to act as a guarantor.

Can I get a mortgage for a mobile home?

Banks and building societies don't offer mortgages for buying mobile homes such as houseboats, caravans or even prefabricated park homes in residential sites. However, it may be possible for find a specialist lender who will lend you the money.

What if there are problems with the property?

You may hit problems with the lender if the property you want to buy is:

• in poor repair
• not a typical house or flat (for example, it's a barn to be converted)
• built of unusual materials, rather than stone, brick and tile.

For properties like this, ask a mortgage broker which lenders are most likely to accept your application. You may have to pay a slightly higher than average rate of interest.

What can I do if I'm turned down?

You may be turned down for a mortgage because of your income or employment status, your credit history, or because of problems with the property, as described above. It may be worth applying again to a different lender, though you may have to tell them that your previous application was refused.

If the problem is a bad debt registered with a credit reference agency, you should double check that the agency's details about you are correct. If you can prove that they are not, you can get the agencies to correct your record and inform the lender that there was a mistake.

If you think a mortgage broker or lender has treated you unfairly, you can make a complaint. You should have been given information about how to make a complaint when you first approached your lender or mortgage broker to find out about mortgages.

It's against the law for mortgage lenders to discriminate against you because you are disabled, or because of your gender, race, religion or sexual orientation. The section on discrimination explains what you can do if you think this has happened to you.