03 Oct 2022
Reasons Your Mortgage Application Might Get Rejected
There are perhaps few moments in life as stressful as getting a mortgage application together and moving home. In fact, moving home has been voted one of the most stressful life events, after suffering a bereavement and getting a divorce.
With rising house prices, just getting to the stage where you can afford a deposit and a mortgage can be tough. You’ve worked hard to get there, so what can you do to prevent your mortgage application being declined?
Here are some reasons your mortgage application could get rejected, so you know what to avoid doing...
Credit History
Your credit history is top of the list when it comes to the most important things that need to be considered when applying for a mortgage.
This is one of the first things that lenders will check when you apply to them for the loan, so you want to make it look as good as possible.
You will be eligible for different mortgage deals depending on what your credit score looks like. Having the best credit score will get you the best mortgage deals, whilst having a low score will limit your options to mortgages with higher interest rates. A low score could cause you to be rejected outright. You’ll also need a bigger deposit to counteract your poor credit score.
If your credit score is poor, you’ll need to work on building it up. If you don’t have any credit history at all, you’ll also need to fix that by doing things like getting a credit-building credit card. Otherwise, a lender won’t be able to judge your ability to repay borrowed money.
Improving your credit score is a matter of paying off your debts, making payments on time and generally using credit in a careful manner. It can take a while to build credit back up, especially as negative information can stay on your credit report for several years.
You can view your credit score here.
Money Management
Having a lot of debts, making too many applications for credit and taking out things like payday loans can make you look like you have financial issues. Try to avoid making any of these sorts of applications if you’re after a mortgage, you may also need to work on your debt issue beforehand.
Not Registered to Vote
Being on the electoral register is important in order for lenders to confirm things like your identity and your current address.
Many people assume they are registered to vote but may not be. This could be due to a change in circumstances, an example being that many forget to re-register when they move house. Double check this and make sure you’re registered at the right address.
Registering to vote can also contribute a few extra points to your credit score, so if you haven’t already, you can register quickly and easily online by visiting the gov.uk website here.
It also helps to have been at your current address for a good amount of time, as you want to show as much stability to a lender as possible.
Undisclosed/Incorrect Information or Admin Errors
Just as checking you’re registered to vote at the correct address is important, so is the accuracy of all your other information. Fill forms out carefully, as mistakes can lead to a rejection.
Don’t guess or estimate anything, make sure you put in the exact information when writing down things like your salary. Don’t leave out any information either, disclose all your financial commitments such as paying for childcare as it could look bad if something that isn’t disclosed is picked up later.
It is possible that administration errors could happen on the lender’s side, so be sure to ask the lender why your application was rejected.
Deposit Too Small
If your deposit is smaller, then you’re asking to borrow a lot of money, which might lead to your application being rejected, especially if your other circumstances aren’t as good as they could be.
Whilst there are 5% loans currently running, the bigger the deposit the better. So if you can keep saving for longer, it will increase your chances.
Job Information
Certain aspects of your employment can affect an application. You could be turned down by lenders if they think your salary isn’t high enough to make repayments.
Other information about your job that could affect an application include not being at your job for long enough. You’ll also have to prove stability if you’re self employed or a contractor, finding a lender willing to accept these kinds of employment will help.
A Combination of the Above
You may have been close to a successful application but small issues have added up. The mortgage application process can be unforgiving, but the good news is that if the issues are only minor, it won’t take you as long to work on them and be ready for another try.
You Need A Different Lender
Different lenders have different criteria that you must meet in order to qualify for a mortgage from them. Where one lender may reject you, another one may be a little more forgiving.
An online mortgage advisor will find lenders and mortgages that best match your circumstances, making the process less stressful.
We Can Help
We can look for the right mortgage for you and increase your chances of a successful application, just give us a call on 03300 58 60 58 or email us at ask@mortgages.online and a member of our team can help. You can also start the process straight away by using our form and getting an idea of the mortgage you could get.
We will complete and submit your application as well as chase up its progress, giving you case updates at least once a week.
