Why has my mortgage been declined?

No-one wants to hear the words “your mortgage has been declined,” however this does happen but it doesn’t need to be the end of the road. There can be many reasons why your mortgage is declined and we can provide you with the relevant advice on how to improve your chances of securing the money you need.

Why has your mortgage been declined?

Usually this happens because you don’t fit the building society or bank’s lending criteria. Your mortgage application will be assessed against their list of requirements for lending and if you don’t tick all of their boxes your mortgage will be declined. Every lender assesses applications differently, for example, one lender may require three months bank statements and another will only require one month. Some won’t lend if you have been in your job for less than a year, others will.

For the reasons above, we always assure clients that we just need to find the lender whose criteria you meet. This is one of the main advantages of working with mortgage brokers like ourselves because we are familiar with every lender’s criteria and can match you to the mortgage firm most likely to accept your personal circumstances.

Reasons why a mortgage is declined:

  • Poor credit history. You can check your credit report here.
  • Too much debt. You should try to pay as much of your debt off as possible.
  • Affordability. The mortgage has been declined on affordability. The lender’s calculations say you won’t be able to afford the mortgage repayments.
  • Not registered to vote. Lenders need to confirm who you are and where you live and they do this via the electoral roll.
  • Small deposit. You will need to meet a specific loan-to-value calculation to be suitable for a mortgage.
  • A mistake on your application. There may have been a mistake on your mortgage application or your credit report.

A mortgage can be declined at five stages:

  1. Mortgage agreement in principle declined. A mortgage in principle is a preliminary decision made by the lender. If you are rejected at this stage, it doesn’t mean that you will not be accepted by another lender. However, before you apply with another lender you should find out why you were rejected.
  2. Mortgage declined despite agreement in principle. A mortgage in principle agreement doesn’t guarantee that you will be given a mortgage. If you are rejected at this stage then ask the lender for an explanation and try to correct the problem before applying elsewhere. Speaking to a mortgage broker will really help at this stage.
  3. Mortgage declined by underwriter. All mortgage applications will go to the lender’s underwriting team where they will assess how risky you are and whether that risk is worth them taking on. Your mortgage may be declined at this stage for any of the reasons listed above. If you are declined you can appeal the decision but it is rare for the underwriter to change their mind. Your best option is to speak to a mortgage broker who will be able to advise what went wrong.
  4. Mortgage declined on affordability. Having your mortgage declined on affordability doesn’t necessarily mean you can’t afford the repayments. Each lender has their own rules regarding what income they will include in their calculations. Speaking with a mortgage broker will help as they know which lenders will accept your income.
  5. Mortgage application declined by underwriter after valuation. As part of your application your lender will conduct their own valuation of the property you are hoping to buy. This itself can lead to your application being rejected. This might happen if the surveyor has down-valued the property or they have concerns about its suitability as security on the loan.

If you would like advice on why your mortgage application has been declined or need to find another lender, then please get in touch and one of our experienced mortgage advisors will arrange a call with you to discuss your specific situation.

*Your home may be repossessed if you do not keep up repayment on your mortgage.

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