Going through a mortgage application can be a complex process, which is why getting turned down by lenders can be so upsetting. If your application is rejected, this doesn’t mean that your plans to become a homeowner are over, because there are things you can do to improve your chances of getting approved next time.
Keep in mind, your application could show up on your credit file so it’s important not to immediately rush off to another lender.
Why were you turned down?
There are a variety of reasons why certain lenders may reject your mortgage application:
- Having a bad credit rating - Maybe you’ve been late with bills, have CCJs, or you’ve never borrowed before. You can check your credit file with companies such as Experian, Equifax or CallCredit, allowing you to see what the lenders see. This can be useful for correcting mistakes that you spot.
- Deposit not being big enough - Since the credit crunch, lenders have adopting tighter rules, meaning that you might simply need a larger deposit to secure the mortgage you want.
- Having too much debt- If you owe a lot of debt, lenders will be concerned with your affordability. They will take any repayments into account when deciding if you can afford the mortgage.
- Spending too much - Lenders now stress-test applications, meaning they will carry out a review to determine if you can afford the mortgage repayments if interest rates rise further. They will factor in everything from household bills and your income, to childcare costs, commuting expenses and gym memberships.
These are just a few examples of why your application may have been declined, even if your mortgage was agreed in principle
After you’ve been turned down
If you have been declined on a mortgage application, it may be worth asking the lender what their reasons were. Generally they won’t give specific reasons and instead will simply refer you to your credit score. However, sometimes they might provide a little more information, such as how long you’ve been at your current place of employment.
A number of lenders are wary when it comes to lending to those who work as contractors, simply because there might be no steady source of income. Also, older borrowers may find it more difficult to get accepted for a remortgage for example, especially if they need the debt to run for a longer period.
Another option is to seek the help and guidance of a professional mortgage broker, or independent financial adviser who specialises in mortgages if you’ve had an application turned down. A mortgage broker for example, will have regular dealings with a wide selection of lenders, liaise with them for you, and know what they require before offering a mortgage.
One of the most important things is to not keep applying for every mortgage you can find, as this will affect any credit checks carried out on your file. It’s recommended that you only apply for one mortgage at a time, and if you want to improve your chances of getting accepted - then please get in touch with our expert mortgage broker team at TaylorMade today.
