Skip to main content

Problems getting a mortgage

In certain cases it may be difficult to get a mortgage, for example if you are self-employed, a student 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 don't have enough 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%. 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.

If the lender won't lend you all the money you need, you may be able to get a top-up loan from an insurance company or bank. You should be very wary of overstretching your finances in this way. In addition, if you borrow 100% of the value, there's 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'll usually need to provide the lender with accounts for the last three years. If you can't provide this information you may have to get a non-status mortgage. These are usually given to people who have credit problems, have no credit history, or can't prove their income. Few lenders offer non-status mortgages, as they believe that there is more risk of the repayments not being met. A mortgage broker should be able to help you find a lender who offers non-status mortgages. 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 bad credit record?

Applying for a mortgage usually involves a credit check. You can 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. They'll also give you tips on how to improve your credit rating.

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 a higher rate of interest. 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?

The following options may be available to you if you 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. However, the right to buy in Scotland is becoming more and more restricted.
  • 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?

There are several things you can do if your mortgage application is turned down:

  • Apply to a different lender - 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.
  • Check your credit status - 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.
  • Make a complaint - if you think a mortgage broker or lender has treated you unfairly, you can make a complaint about the mortgage broker or lender. 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.

Scotland map Housing laws differ between Scotland and England.
This content applies to Scotland only.
Get advice if you're England

The important points

  • Lenders are unlikely to lend you 100% of the value of the property and if you borrow over 90% you may be asked to pay for mortgage indemnity guarantee insurance.
  • If you are self-employed or have an irregular income, your lender will ask for evidence of your earnings for the past three years.
  • Some lenders provide non-status mortgages for buyers who have credit problems, no credit history or can't prove their income but these can ask for a larger deposit and a higher rate of interest.
  • Your mortgage lender might object if the property you want to buy is in poor repair or is unusual or built of unusual material.

If you're still looking for help, try searching, or find out how to contact us

Was this page helpful?

This feedback tool can't offer advice. If you still need help, please call our free housing helpline on 0808 800 4444

Would you recommend Shelter Scotland's website to a friend, colleague or family member?
(0 - not at all likely, 10 - extremely likely)

Your feedback is being submitted

Success! Thank you for your feedback.

If you'd like to hear more about our work at Shelter Scotland, you can sign up to receive updates on our campaigns page.

Sorry, there was a problem sending your feedback to us. Please try again or contact us via the website if this error persists.

The fight isn't over - support us this summer

far from fixed campaign logo
It’s a disgrace that people are still homeless in Scotland today. Join our campaign
It’s a disgrace that people are still homeless in Scotland today.
Volunteer
Find out more about volunteering with Shelter Scotland
Volunteer with Shelter Scotland
Have you had a bad housing experience? Tell us about your story.
Share your story of a bad housing experience
£