Mortgage applications can go wrong for all manner of reasons, throwing property purchases into disarray.

Sometimes, these events are outside the control of the borrower - but more often, applications fail or are delayed due to mistakes that could have been avoided.

We asked three mortgage experts to reveal the biggest mistakes that are made by borrowers which result in applications either being declined or delayed.

The 15 common errors include unusual transactions on bank statements, a recent job change, undisclosed debts and and the wrong address on someone's ID.

We spoke to Ravesh Patel, director and senior mortgage consultant at broker Reside Mortgages, Terry Higgins, group managing director at New Homes Mortgage Helpline and David Hollingworth, associate director at L&C Mortgages.

1. Gifted funds

Gifted deposits reached a record high in 2024, with reports from Legal & General (L&G) indicating that financial gifts contribute to 42 per cent of purchases by first-time buyers under 55. 

However, more than two-thirds of Britons remain unaware that gifted funds could affect the outcome of their mortgage application, according to a recent survey by David Wilson Homes.

'While gifted deposits can be a great way to support first-time buyers, they can also raise potential red flags during the mortgage application process if not properly documented,' says Terry Higgins of The New Homes Group.

'Lenders need to ensure that the funds are legitimate and not loans in disguise, which could affect affordability calculations. 

'Without clear evidence of the source and nature of the gift, applications can face delays, additional scrutiny, or even rejection.'

Buyers accepting cash gifts to put towards their home should work closely with their lender or broker to ensure everything is properly documented.  

Ravesh Patel of Reside Mortgages adds: 'Lenders typically require a formal gifted deposit letter from the donor confirming no repayment expectations, and in some cases, additional checks on the donor's finances.' 

2. Unusual bank transactions

The second most common mistake mortgage applicants make is not keeping track of their bank transactions or failure to address any that might appear unusual.

'Large, unexplained transactions such as sudden large deposits, cryptocurrency activity, or international transfers can raise concerns about the source of funds,' says Patel. 

'Lenders look for stability and transparency in financial behaviour so may ask for additional bank statements if funds are moved around different accounts frequently. 

3. Signs you're a gambler

Lenders usually ask for the borrower's latest three months of bank statements as part of a mortgage application, so they can pick up on anything untoward.

If a lender spots large or regular transactions associated with gambling, they may pull the plug on the application as it could be a sign the borrower's financial situation is precarious. 

'Regular gambling can add complication and be treated as a commitment where there's regular deposits being made,' says David Hollingworth of L&C Mortgages.

'That would at least affect affordability and the amount of available borrowing and potentially prevent a successful application.'

Patel adds: 'While occasional gambling isn't necessarily an issue, frequent or high-value betting activity on bank statements can make lenders question financial stability.'

4. Self-employed income

Self-employed workers and freelancers are more likely to have irregular income than salaried staff, so it's essential to document their income accurately to support a successful mortgage application.

'Irregular income can make it harder for lenders to assess your affordability,' says Higgins. 

'Things like freelance payments, cash deposits or ad-hoc bonuses might seem unreliable without proper documentation. 

'To avoid issues, provide clear records like invoices or tax returns to show your income is consistent over time.'

Self-employed people proving insufficient records is a common issue with mortgage applications, according to Patel.

'Many lenders require at least two to three years of accounts or SA302 tax returns. A lack of consistent proof of income can lead to difficulty securing a mortgage or result in higher interest rates,' he says. 

5. Incorrect address on ID

As many as 12 per cent of borrowers have an incorrect address on their photo ID, according to the survey by David Wilson Homes. This would be where a passport or driver's licence has an old address on it, for example.

While it might seem like a minor issue, this can significantly affect the outcome of a mortgage application.

'Having the correct address on your ID is essential for a smooth mortgage application process,' warns Higgins.

'Lenders use your ID to verify your identity and address, and any discrepancies can raise red flags or cause delays and can often lead to your application being declined. 

'Ensuring your ID is up to date shows accuracy and reliability, which are crucial when applying for a mortgage.'

It is important that all documents provided show the same address, as this helps confirm the borrower's identity.  

Patel adds: 'Discrepancies between an applicant's ID, bank statements, and credit report can delay processing. 

'Lenders need clear proof of residency and identity, so outdated addresses can trigger further verification checks.'

6. Recent job change

Starting a new job can be exciting, but if someone is in the middle of a mortgage application, it's crucial to document every step of their transition from their old employer to the new one.

'Lenders prefer stability and may be cautious if someone has recently switched jobs, particularly if they are still in a probation period,' says Patel.

'Some lenders require at least three to six months in a new role before considering an application. 

'Changing jobs is not always seen as negative, however choosing a right lender in such types of scenarios is crucial. 

'Changing jobs during a mortgage application can complicate the process, so it's vital to keep thorough documentation.'

7. Undisclosed debts

Undisclosed debts, including personal loans, student loans, and buy now, pay later use can delay a mortgage application, affect loan terms, or even result in rejection.

'Lenders need a complete picture of your financial commitments to assess your affordability accurately,' says Higgins.

'Any undisclosed debt discovered later could delay the process, decrease the amount that you can borrow, or even result in a declined application. 

'To avoid these issues, always be transparent about all financial obligations, no matter how small, and ensure all debts are fully disclosed upfront.'

Patel adds: 'Failing to declare loans, credit cards, or other financial commitments can lead to a rejected application if lenders discover them through credit checks. 

'Even buy now, pay later schemes can affect affordability calculations.'

8. Incorrect or incomplete documentation

Incorrect or incomplete documentation can delay a mortgage application, as lenders may require additional information to verify a person's financial situation.

'Lenders rely on accurate and complete paperwork to assess your financial situation,' says Higgins. 

'Missing documents or errors could lead to a rejection or extended processing times.

'To avoid this, double-check all forms for accuracy, ensure all required documents are submitted, and communicate promptly with your lender if anything is unclear.'

9. Credit report errors

Close to a third of mortgage applicants are unaware of the potential negative impacts of credit report errors, according to the survey.

It can happen that there are errors on a person's credit file that they are not even aware of. 

For example, it may be that they unknowingly have not paid a utility bill in the past and that is now showing as a default or late payment on their credit file. 

Another example is that they could have a County Court Judgement served to a previous address for an unpaid parking penalty charge notice.

'Even small inaccuracies, such as incorrect account balances or missed payments, can lower your credit score and affect your eligibility, or decrease the amount that you can borrow,' says Higgins.

Hollingworth adds: 'It's easy to get hold of a copy of your file from the main credit reference agencies so you can see what they will be looking at. 

'That can be helpful so you can flag any issues, but also to check that it's not holding any incorrect information. 

'If you think there's an error then it can be possible to raise a query with the provider and credit reference agency as it would be beneficial to erase any incorrect entries to give the mortgage application the best possible chance.'

10. Not being on the electoral roll

Not being registered at the correct address in order to vote could also hamper a mortgage application, as this is used to prove your residence and link different parts of your financial profile. 

'Making sure that you're on the electoral roll is a good idea,' says Hollingworth. 

'Lenders will conduct credit checks and the easier it is to see an address history the better. It will help with credit scoring too.'  

11. Red flags on credit file 

Mortgage lenders will interpret certain debt as a sign that someone may be a bad borrower. 

'Even if repaid on time, payday loans can indicate financial distress,' says Patel.

'Many lenders view them negatively, as they suggest reliance on short-term borrowing. 

'Also regular use of an overdraft, especially if exceeding the limit, can indicate poor financial management and affect affordability assessments and confidence level for lending.' 

12. Someone else impacting your credit history 

Financial associations with a partner or a friend on a credit file can prove fatal.

'Having a joint financial product such as a shared loan or bank account with someone with a poor credit history can negatively impact an application, as lenders consider their financial behaviour alongside yours,' says Patel.

13. Multiple credit applications

Applying for several credit products such as credit cards, loans or car finance over a short time period can lower a credit score and suggest financial strain, according to Ravesh Patel.

This can lead to a reduced mortgage offer or rejection if application cannot reach credit certain scoring points.

14. Deposit scrutiny

If a deposit is coming from an unusual source this can cause issues. This might include from overseas funds or cryptocurrency profits. 

'Lenders require clear documentation to ensure compliance with anti-money laundering regulations,' says Patel. 'Lack of proof can lead to delays or refusal.'

15. Underestimating existing commitments

Lenders take into account all financial obligations, including car finance, childcare costs, and maintenance payments. 

Underreporting these, for example by underestimating the amount you pay each month, can lead to affordability issues.