4 Main Reasons Why Your Mortgage Application Might Be Declined

4 Main Reasons Why Your Mortgage Application Might Be Declined

Getting to the stage where you can apply for a mortgage isn’t easy, and it can be disheartening when your application is rejected after all that effort. Don’t give up though, the key to a successful application is knowing what could stop you from being accepted.

In this article, we’ll be looking at the 4 main reasons that could cause your mortgage application to be denied.

1. Credit History

Your credit history is one of the main things that lenders will look at during the assessment of your application.

Your current credit score and history shows lenders how you handle borrowing money. This is obviously very important as getting a mortgage means you are probably borrowing the most amount of money you ever will in your lifetime.

Having a bad or poor credit history will cast doubt on your ability to repay your mortgage and lenders will see you as a risk. They’ll think that if you struggle to make payments for smaller things on time, you’ll probably struggle to pay back on something as large as a mortgage.

For more on improving your credit score, click here.

No Credit History

It’s not just bad credit history either, having no credit history at all can also be problematic as there is no evidence that you are good at paying off debts. If you don’t have much (or any) credit history, you’ll need to rectify this by building up your credit score.

You can apply for a Low-credit credit card in order to begin contributing to your score. Start using it when you buy things, as long as you can afford to pay it back.

Fortunately, it’s a lot easier to get your credit score to the top if you’re just starting out on building it up. It shouldn’t take too long to get it looking good. You’ll want your credit score to be as high as possible to look good to lenders.

The higher your credit score is, the better mortgage deals you will have access to. Try not to worry though, Adverse Mortgage Advisors specialise in getting a mortgage with bad credit.

The Best Way to Check Your Credit Score

The best way to get an in depth check on your credit score is by using Checkmyfile. It covers all angles by having credit score websites such as Experian, Equifax and TransUnion all in one report, and we’ll be able to get far more accurate results using this.

You can get a 30-day free trial here.

2. Too Many Debts and Credit Applications

Having too much debt before you even get on the property ladder will be a big blow to your chances of mortgage acceptance.  You might need to concentrate on fixing this issue before applying for a mortgage. If the debts are causing distress, seek advice from professionals.

Even if you don’t have too much debt, you’ll want to make sure not to do anything that looks like you have money issues. This includes making too many credit applications in a short space of time.

Avoid doing this if you’re applying for a mortgage now or in the near future, as credit applications lead the lender to check your credit report and these credit checks leave a mark on your credit history.

Remember to close old accounts if you switch to a new card. Lenders will look at the availability of debt – and dormant credit cards with credit facilities is a big issue. People commonly forget to close accounts for old cards when they switch balances over to 0% cards.

3. Not Registered to Vote

It may sound like a simple thing, but you need to be on the electoral register. It’s common that people assume they are registered when they aren’t, so make sure you are.

The reason that being on the electoral register is so important is so that lenders can confirm your identity and where you live. You need to be registered at your current address.

Registering to vote also gives a bit of a boost to your credit score, so it’s an additional reason to do so. It also works in your favour if you’ve been at your current address for a long time, as it shows stability to the lender.

You can easily register online using the Electoral Commission website or by doing it through your local council.

4. Incorrect Information

Mortgage applications are strict and highly sensitive, if there is a mistake or something doesn’t add up it can lead to a rejection, even if it’s a seemingly negligible typo.

Make sure everything you submit on your application is correct and matches on all documents. Subtle differences in details like your address or earnings can cause a complication in the system.

Fill in the forms carefully and don’t guess things like how long you’ve lived at a previous address or how much your partner earns, you need to be prepared and give an accurate answer to all of these questions.

Other Reasons

Though these are some of the most common reasons, there may be a few other things to consider, such as:

  • Not earning enough
  • Deposit too small for your circumstances
  • You’re too old for the length of the mortgage
  • Undisclosed commitments such as childcare or school fees (these will not show up on a credit report but will be picked up on bank statements)

If you run into problems because of these reasons or others, it may just be a case of finding a different lender or type of mortgage. Always seek advice from experts if this happens.

You May Be Closer Than You Think

Even though your mortgage application was rejected, you might not have been as far from getting accepted as you think.

Sometimes it might turn out that you were close to the requirements of getting approved but small things have combined and conspired against you, resulting in your mortgage being declined.

So, check on these 4 main reasons, perhaps you’ve done a small amount of each and it’s just enough to tip the scales out of your favour.

Different lenders have different criteria, so whilst one might not approve you, there may be another one that will. 

Get Help and Advice

If you’re worried about your mortgage application being rejected, or it has already happened and you need to try again, we can help to find a lender and mortgage that’s right for you.

For more advice, email us at info@adversemortgageadvisors.co.uk or give us a call on 01268 294777.

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If you have questions about getting a mortgage with an adverse credit score, read our FAQs. Our wealth of knowledge within this market means that we’re confident in our ability to offer specialist mortgage advice and secure the mortgage you want regardless of your credit history.

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