Checked by Connor Fitzgerald, Founding Director
Did you know that, according to a recent report, 65% of mortgage applications are unsuccessful first time round? Meanwhile, only a third of first time buyer applicants are successful on their first attempt.
Submitting a mortgage application can be a time-consuming and daunting process, and then after all that you may be met with that dreaded rejection letter. So, whether you’re a first time home buyer, looking to move homes, remortgaging, or purchasing a buy to let property, we’re here to help you understand why your application may have been unsuccessful and, more importantly, what to do about it!
When you purchase a house or property, more often than not you will not be able to cover the full price of the house on your own. This is where lenders and mortgages come into play. To purchase a home you will often need to save up for a deposit (a deposit is normally a minimum of 5% of the purchase property price) and the remainder of the money is supplied with a mortgage.
If you’ve had a mortgage application refused, it is normally due to various reasons, but it means that that particular lender will not loan you the remaining money for you to purchase your chosen property.
When you apply for a mortgage, your details and credit history are rigorously checked against varying criteria. (Find out more about mortgage applications in our blog post, ‘Buy to let mortgages – your questions answered’ and ‘All you need to know about variable rate mortgages’). Some of the criteria that you could be refused a mortgage for, include, but are not limited to:
Lenders will check your credit score to assess the risk of lending you money. Credit checks will highlight to your chosen lender if there is any risk in you paying your monthly mortgage repayments on time.
Poor credit history can be indicated by the following:
Find out more about credit checks in our blog posts:
Registering to vote is one of the easiest ways that you can improve your credit score and chances of your mortgage application being accepted. By registering to vote with your current address, lenders can confirm who you are and where you’re currently residing.
When you apply for a new credit card or a new phone contract, lenders will complete a credit report to check your suitability. Most of these will either be recorded as a ‘soft search’ or a ‘hard search’. While a soft search won’t typically be seen by other companies, so shouldn’t affect your credit score, a hard search is visible and can leave a mark on your file.
Having too many credit checks in a short period of time can indicate that you’re applying for lots of credit, can make it look as if you’re in financial trouble and could make you look like an untrustworthy borrower.
Having too much debt or loans to pay off can also cause your mortgage application to be refused.
The refusal of your mortgage application could be due to asking to borrow too much, application errors, low credit scores or not matching the lender’s preferred profile. There are also a wide range of other reasons why your mortgage application may be declined, including by not limited to:
In most cases, if you’re unable to pay your monthly mortgage repayments, your home can be repossessed by your lender. In those cases, the bank will look to sell the property within 90 days to gain back their losses. If the property you’re purchasing has any aspects that could mean it’s harder to sell, your application may be declined.
We’ve recently seen a fantastic property go through multiple lenders as the property is connected to a graveyard and was seen as a difficult property to resell.
To be approved for a mortgage, most lenders require proof of a steady income. If you’re self-employed, a freelancer or a contract worker, you will need to provide tax statements and accounts for at least two to three years. Failing to do so could result in your application being rejected. Find out more about self-employed mortgage applications in our blog post: ‘Your self-employed mortgage guide’.
Suppose you’ve recently moved to the UK and are looking to buy. In that case, you may need to provide additional information on your initial application, such as an employment contract and a visa allowing you to live and work in the UK.
If you do not provide the aforementioned criteria lenders may refuse to lend to you.
Has your mortgage application recently been refused? The Levels Financial can help. We offer first-class and award-winning help and advice which can be tailored to suit you. Our team pride themselves on offering jargon-free and personalised advice to help you secure a mortgage for your dream home.
Get in touch with us today to book your free initial consultation by contacting our team at admin@thelevelsfinancial.co.uk or calling us on 01458 772040.
Because we always have your best interests at heart, you need to know that your home may be repossessed if you do not keep up repayments on your mortgage. There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.
