Top 5 Reasons Your Mortgage Application Could Be Declined

Getting turned down for a mortgage is never fun. It can leave you feeling stressed, disappointed and frustrated. Unfortunately, it happens all the time. In fact, 65% of wannabe homeowners in the UK have had a mortgage application rejected at some point.

The key is to be clued up on why applications get declined so you can make sure you optimise your chances of getting the green light when it comes to applying.

Here are the top 5 reasons a lender may turn you away:

Your deposit is too small

The smaller your deposit, the higher your chances are of being rejected. Lenders prefer larger deposits because they view you as a less risky borrower if you’re investing more of your own money into the property purchase.

That’s not to say you can’t get a mortgage with a small deposit. But generally speaking, the bigger your deposit, the more chance you have of being accepted.

You didn’t review your credit reports

Lenders use credit reports to determine whether or not you’ll be a reliable borrower. They detail all your past loans and record how much credit you were given and how good you were at making the repayments.

If there are any red flags on your reports, for example defaults or missed payments, a lender may turn you down.

However, sometimes credit reports contain inaccuracies or outdated information. That’s why it’s vital to check your credit reports before making an application and correcting any mistakes or explaining any late payments.

You approached the wrong lender

If your situation is even slightly complex – for example, you’re self-employed or you’re buying a non-standard property – you may find mainstream lenders decline your application.

However, there are plenty of specialist lenders who exist solely to help people with unique circumstances secure a mortgage.

The key is finding the right lender for your exact needs.

You can’t afford the repayments

All lenders carry out strict affordability checks to make sure you’ll be able to afford your monthly mortgage repayments. They’ll look at your earnings, your expenditure and at any debt payments you need to meet.

If they think you’ll struggle to afford the mortgage, they may turn your application down. A shrewd move is to first approach a mortgage broker so they can identify the mortgage lenders who will be more empathetic towards your application.

Your new property failed its survey

During the application process, most lenders will appoint an independent valuer to survey the property you want to buy to make sure it’s worth what you’re paying for it. They’ll also inspect the property for any structural problems.

If the surveyor’s report says you’re paying over the odds for the property, or that there’s something wrong with it, your mortgage could be rejected.

Have you had a mortgage application declined? Boost your chances of getting approved next time by speaking to a specialist broker from our network today.