There are several common reasons for being refused a mortgage. These can range from having CCJs, to being self employed, being bankrupt, having debts or even having no credit history.

CCJs

A CCJ is a County Court Judgement. These are taken out against you if you have consistently been late paying store cards, catalogues or even utility bills. Water companies and catalogues are known for issuing CCJs very quickly. These will be lodged on your credit record for six years whether the original bills have been paid or not.

Self Employed

If you have been trading for less than three years, or your business has shown a downturn within that period, it may be difficult to be approved for a mortgage from a prime lender.

Bankrupt

Provided you have been discharged from bankruptcy for a year and any Individual Voluntary Arrangement drawn up prior to the bankruptcy has been carried out, then you should be able to take out a mortgage.

Having debts or no credit history

It may be that you have credit card or student debts which mean that you can not take out a mortgage high enough to actually afford a house in the current market. Alternatively, if you have no credit history with a credit reference agency, lenders may not be willing to take you on as a risk.

Even a simple reason such as having moved a lot or renting a property following a divorce can affect your credit rating, rendering you ineligible for a standard mortgage. However there are sub prime lenders who would be happy to have your business. This is a lender who is more prepared to take a risk. They will cover themselves by charging slightly higher interest rates, although these should not be significantly higher than for a standard mortgage. They also will not be willing to offer huge amounts of money and would prefer a good percentage of the total value as a deposit.

If you have been turned down for a mortgage, do not go to another lender as each rejection leaves a mark on your credit history file. Instead, try a broker who will have specialist knowledge of where to go for the best mortgage for your circumstances.

Going to see a sub prime lender for a mortgage will ensure that your case is dealt with individually. You are not relying on a credit score, but on an individual case basis. If you take out a mortgage with a sub prime lender, and keep up regular payments for three years, your credit record will then be clear and you can move to a more competitive mortgage. It is therefore important not to tie yourself into a mortgage with a sub prime lender for more than three years.

Although seeing a sub prime lender will give you more of a chance of being able to take out a mortgage, if you have a consistently bad history of debt clearing, and can not prove that this is now not the case, you will not be offered a mortgage.

Other areas to look into: paying off arrears, child support arrears, mortgage repossession