Declined a mortgage? its easy to think that means every lender will come to the same decision but that might not be the case!
So you’ve found your dream home or found an amazing new remortgage deal. Everything is going fine and SNAP all of a sudden you get that call or email to say your mortgage application has been declined.
That’s the end! You can no longer buy your dream home or save yourself money every month. Well, that might not be the case, don’t just rush to reapply elsewhere! Read on to find out what you can do. Need some help now then get in touch to see how we can help you.
There are many reasons a mortgage application might be declined. Some you have no control over, others its a case of knowing which lender to use.
Lenders have different views when it comes to income and how they assess income. Some will include bonuses, commission, overtime, others won’t or will only include a certain percentage.
Some will use benefit income, rental income, investment income and other income sources whereas some won’t include them at all.
If you are self employed some will use an average of the last 2 years income, others your latest years figures. Lenders may also use different income multiples (a figure based on how many times your annual income they will lend) depending on the amount of income, deposit and other circumstances.
Assessing income varies massively across lenders and will only be checked fully when a mortgage application is submitted. So even if you have a mortgage in principle accepted, when an underwriter looks at your income and applies the banks criteria this can cause your mortgage application to be declined if not calculated correctly up front.
Banks will take different things into account when calculating your affordability and ultimately how much they will lend you.
For example having a £200 a month loan may not impact your lending with one lender but may reduce it with another.
Having too much debt compared to your income can cause your application to be declined but might not be an issue with a different bank.
A regular monthly payment could be spotted on your bank statement after you apply which when taken into account could mean the mortgage is not longer affordable.
The list goes on and as with income every lender decides how much they are willing to lend you in a different way so can be a common reason for mortgage applications being declined.
Some lenders look at your Experian/equifax/transunion credit score, some search your credit history to make a decision. Others give you their own score based on a number of factors like employment status, previous credit conduct, deposit etc. They all have different criteria’s when it comes to your credit score and history. Credit report
Life happens and credit blips aren’t uncommon. Missed payments, defaults, CCJs, pay day loans can all cause your application to be declined. However these can be acceptable with a different lender. Knowing the criteria before applying can be the difference between being accepted and declined and speaking to an expert is the best way to improve your chance of a successful application.
Even if everything else is approved the lender still needs to ensure that the property provides suitable security for them if anything were to happen and you were unable to pay your mortgage.
When your mortgage application is submitted a valuation will be instructed to see if the property is acceptable for the bank.
Things like non standard construction, solar panels, commercial premises nearby and many more are all looked at differently by banks. You won’t find out until the valuation is completed that the bank will not accept them. This can even mean that you lose money if you have paid for the valuation. An experienced mortgage broker will have come across most of these scenarios and know which lender will accept the property.
Down valuations is also a common reason mortgage applications can be declined. This just means that the surveyor doesn’t think the property is worth what you are paying and tells the bank it is worth less. You may have options to change your product to a higher loan to value product, add more deposit or even renegotiate the price you are paying. But, for example if you are borrowing 95% and don’t have extra deposit this may not be possible and therefore the application not able to proceed.95% Mortgage
These are the most common property related issues that cause mortgage applications to be declined however there are more. Having a mortgage broker with experience can prevent some of these problems occurring and make it more likely your application will be problem free.
There are plenty of other reasons a mortgage application might be declined some as minor as a funny reference you put on a payment to a friend.
Things like gambling on bank statements, errors on your application, financial associations, being unable to provide the right documents and many many more can all cause problems.
But what do you do if you have been declined a mortgage. Read on to find out the best way to get your next mortgage application accepted.
Declined a mortgage? It can be tempting to just try another bank. Don’t rush though. As making multiple mortgage applications can affect your credit score and put you in an even worse position.
If possible get as much information as possible as to why your mortgage application was declined. Once you know why you have been declined a mortgage this can help to improve your chance of being accepted with the right advice.
If you’ve been declined a mortgage we would highly recommend you speak to an experienced mortgage broker. Be honest with them and explain the situation. They will go through your circumstances, income, credit history, outgoings and the property. They will also review the reason your previous mortgage application was declined if known. Or figure out why your previous application was declined and explain this to you.
Once they have assessed everything they should be able to advise you on the right mortgage. They will know your situation inside and out as well as the lenders criteria. And may have even spoken to an underwriter before submitting your mortgage application. This should massively improve your chance of a successful mortgage application.
To summarise, mortgage applications are declined and it can be upsetting. But with 100’s of lenders out there all with different criteria’s there’s usually another solution.
It’s just about knowing where to look. So get advice from a broker with access to the whole market to give you the best possible chance of being accepted.
Blue crocodile are whole of market mortgage brokers with experienced advisers so if you’ve been declined a mortgage then we would love to help you. There’s nothing better for us than when a customer thinks they may have lost their dream home and we get it back on track.
Speak to an expert today.