There are a number of reasons why a lender may reject your mortgage application. We take a look at some of the most common reasons below as well as a number of things you can do to improve your chances of getting approved.
You have poor credit history
If you have defaulted on past payments this will have a negative impact on your credit rating. Before you apply for a mortgage, it is wise to check your credit file.
This gives you an opportunity to try and correct any past mistakes and improve your credit score.
If any of the information on your credit report is wrong, you can apply to have this corrected.
You’re not on the electoral register
Sometimes your mortgage application can be rejected for something as simple as not being registered to vote. Lenders use the electoral register to confirm you are who you say you are and where you live. If your details aren’t on here, it could lead to a rejection, even if all other details are fine.
You’ve made too many applications
Most credit searches are recorded, and will leave a mark on your file. Applying for lots of credit over a short space of time can set off alarm bells with a lender. To them, it could look like you have money problems and are desperate for credit. Try to avoid taking out other new credit deals before applying for a mortgage.
You have a lot of outstanding debt
Debt payments can affect your affordability. This means that if you can get accepted for a mortgage, it may not be for as much as you need. But lots of debt could lead to your application being rejected completely.
If you are struggling to pay off your debts, then it is worth seeking advice. There is lots of free and confidential advice out there that can support you to get back on track, such as https://www.stepchange.org/
You don’t match the lenders criteria
All mortgages are different. Lenders have different criteria and will take a number of factors into consideration when assessing your application. This could be based on age, income, employment status, the value of the loan, the type of property to name but a few. If you are unable to meet these requirements, the lender will reject your application.
This doesn’t mean that you can’t get accepted for any mortgage. You just need to find a deal where you meet the lending criteria more closely.
What can I do to improve the chances of getting accepted?
One of the simplest things you can do to improve your chances of a successful mortgage application is to speak to an independent mortgage broker.
A whole-of-market mortgage broker will be familiar with the deals that are on offer – including those that aren’t available on the high street. They will be aware of the criteria that lenders are looking for and therefore should only suggest mortgages that you are likely to be accepted for.
Basically, a mortgage broker will do all the legwork and research for you so you don’t have to. Finding the right mortgage can be a challenge, so using the expertise of a mortgage broker can help to take some of the stress out of the situation.
The above post does not constitute advice – financial, legal or otherwise. The information within this article is the author’s own opinion and do not necessarily reflect the views of SO Media or So Smart Money.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE