In this brief guide, we are going to discuss why a Santander mortgage application may be declined and what you can do about it.

Why a Santander mortgage application may be declined?

There are various reasons why a Santander mortgage application may be declined, they include:

Santander mortgage Declined because of too much debt

When assessing your mortgage affordability, Santander will usually look at your credit file to see how much debt you currently have.

If you have way too many debt commitments then your Santander mortgage may be declined due to this.

Santander may feel you have too much debt and you may struggle to keep up on all your debt repayments or the mortgage lender may feel your monthly mortgage repayments will just about fit inside your disposable income after all your other debts have been paid.

In any case, some mortgage lenders may just have a maximum number of debt accounts that a user can have before they will automatically decline the mortgage based on affordability or the mortgage lender may have a maximum debt to income percentile that a user can have before they will decline the mortgage based on affordability. Your Santander mortgage application can, therefore, be declined if you have too much debt and a high debt to income ratio.

Santander mortgage application declined because of your credit score

Santander mortgages may discover things on your credit score which it doesn’t like such as:

A County Court judgement

An Individual voluntary arrangement

A debt management plan

A default ( especially a mortgage default)

A bankruptcy

A home repossession

Having bad credit could, therefore, be a reason why your Santander mortgage application is declined.

Although you may be able to find a mortgage lender who will lend to you even with bad credit you may need to use a specialist mortgage broker such as a bad credit mortgage broker.

Different mortgage lenders will have different criteria for how they treat the things on your credit file. E.g a mortgage lender may not decline your mortgage application if you had a CCJ but it was satisfied years ago. Other mortgage lenders may decline you based on affordability for the same thing.

Santander mortgages will likely have various lending criteria based on the mortgage product you are after.

Santander mortgage application declined because of your monthly expenditure

If your monthly expenditure is too high you may find that your Santander mortgage application could be declined.

Mortgage lenders like to see that you have some room between what you earn and what you spend. This is called your disposable income.

If your disposable income is not big enough to cover the monthly repayment cost of a mortgage then your Santander mortgage application could be declined.

When you initially get a mortgage in principle, Santander may not look in-depth into your finances but once it comes round to making a mortgage offer you will find that they will take a deeper look at your finances.

This means if your transactions have a lot of red flags your Santander mortgage application could be declined.

Santander mortgages will look for transactions which may indicate that you aren’t good at handling your finances well. This could be gambling or constant payday loan repayments.

Many prospective borrowers have been declined for a Santander mortgage for this very reason.

Santander mortgage application declined because of your mortgage deposit

If you haven’t got a large enough mortgage deposit then you may find that Santander may decline you mortgage application.

You may be able to use a government scheme to increase your mortgage deposit or reduce the cost of the property price and thereby reducing how much you need to pay down as a mortgage deposit.

Some of the government schemes you may be able to use to avoid your Santander mortgage application being declined:

Lifetime ISA– gives you a government bonus of £1,000 if you save the maximum £4,000 a year.

Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.

Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.

Shared ownership– You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.

Armed forces help to buy– similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.

Rent to buy– This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.

Right to buy– allows you to buy your home at a discount price.

Preserved right to buy- same as above.

Right to acquire- same as above.

Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.

Most mortgage lenders have strict lending criteria and will not lend beyond their loan to value rates.

A mortgage broker will likely advise you on what mortgage lenders may be willing to lend to you based on the mortgage deposit you have.

Santander mortgage application declined because of your salary

If you don’t meet Santander’s mortgage multiple criteria then your Santander mortgage application could be declined.

Mortgage multiples are a number which mortgage lenders use to multiply your income with to see the maximum they may be able to lend you. A mortgage multiple is better known as an income multiple.

Most mortgage lenders may have a mortgage or income multiple between 3 and 6.

Your salary is a main determining factor on if you could afford a mortgage or not. Mortgage lenders usually use their mortgage multiple as the first basis of your mortgage affordability. If you don’t meet the minimum salary requirements for a Santander mortgage then your Santander mortgage application may be declined.

The only alternatives you may have in this case will be too buy a property with a smaller price or wait till you get a job with better pay.

Different mortgage lenders have different mortgage multiples and to avoid getting declined you should at least have an idea of what these mortgage multiples are before making an application for a mortgage offer or a mortgage in principle.

A mortgage broker may have an idea of what these mortgage multiples could be and be able to place your mortgage application with the best mortgage lender suited to you so you avoid your mortgage being declined on affordability.

Example: A mortgage lender who uses an income multiple of 5 will decline you based on affordability if you apply to their mortgage product for a £500,000 mortgage but you only earn £50,000 which makes you eligible for a maximum mortgage of £250,000 based on their income multiple.

Santander mortgage application declined because of your income

All mortgage lenders will accept salary paid through PAYE and some mortgage lenders will accept benefits and other supplementary income but they will only accept a certain percentile of your supplementary income.

This percentile differs from one mortgage lender to another.

If your mortgage is made up primarily of supplementary income such as benefits then you may need to find a mortgage lender who accepts a high percentile of those if not your risk your mortgage being declined.

Benefits and supplementary income which mortgage lenders may accept include:

Pension income

Investment Income

Overseas earned income

Maintenance Payments

Rental Income

Bursary

Stipend

  • Attendance Allowance benefit
  • Carer’s Allowance benefit
  • Child Benefit
  • Child Tax Credit benefit
  • Disability Living Allowance (DLA)
  • Incapacity Benefit (IB)
  • Industrial Injuries Benefit (IIB)
  • Maternity Allowance benefit
  • Pension Credit benefit
  • Severe Disablement Allowance
  • Widow’s Pension benefit
  • Working tax credit benefit

You should ensure you check with Santander directly or through your mortgage broker to ensure that your Santander mortgage application is not declined because of your income.

Santander mortgage application declined because of the property

Your Santander mortgage application could be declined because of the type of property you are looking to purchase.

If you have a non-standard construction property then you may find it much harder to get a mortgage with some mortgage lenders and this includes Santander.

Other reasons why your Santander mortgage application could be declined include:

Mismatch of information

Your Santander mortgage application could be declined if there is a mismatch of information on what you put down on your mortgage application and what the mortgage underwriter discovers on the supporting documents you send in with your Santander mortgage application.

CIFAS

Another reason why your Santander mortgage application could be declined would be if you have been recorded on the CIFAS record for fraud.

If this is the case then you should get your CIFAS record using a subject access request.

You can then dispute the CIFAS record if it was incorrectly noted.

Retirement age

Another reason why your Santander mortgage application could be declined is if your retirement age is much closer and your mortgage term will end much later than when you retire.

If this is the case then you may find that Santander and most mortgage lenders will decline your mortgage as they will want to know where your income will come from once you have retired.

If you are unable to show where your post-retirement income will come from then the mortgage lender may be right t question where you will raise funds to pay your monthly mortgage repayment.

Undervalued property

Another reason why a Santander mortgage application could be declined is if there is an undervalued property.

This could be the case if you are paying a much higher price for the property than the property is valued at.

Unsuitable proof of deposit funds

If you cannot prove where your mortgage deposit has come from or it has come from an unconventional source which Santander does not approve then you may very well find that your Santander mortgage application is declined.

In the end, if your Santander mortgage application os declined then your only option will be to make a new mortgage application. 

Use a mortgage broker

You may want to consider using an independent mortgage broker to get a mortgage if your Santander mortgage application has been declined.

Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.

This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.

A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.

After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle. 

This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your mortgage is indeed a possibility before you make a full mortgage application. 

Once you have found a home you want to buy and are satisfied with the mortgage offer for your mortgage then the mortgage broker will then look to get you a mortgage offer.

This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month.

It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.

If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.

Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.

They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.

In this brief guide, we discussed why a Santander mortgage application may be declined and what you can do about it.

John Bate

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.