Why Might A Mortgage Be Declined?
Why might a mortgage be declined?
Some people start to apply for a mortgage without assessing their financial situation and their likelihood to get approved first. It can be a good idea to understand the main reasons why you can be declined before applying for a mortgage.
Common reasons for a mortgage being refused:
Poor Credit History
If you have never used credit cards or have never taken out a loan, you may have very little credit history, or none at all. This could have an impact on your credit score. At the Tipton, we manually underwrite mortgage applications, meaning your credit score has no impact on whether or not we will lend. Instead, we will assess your credit history to understand how well you manage your finances and the overall risk of lending to you. However, many other lenders will have a minimum credit score needed to secure a mortgage.
Not Registered to Vote
Lenders will need to confirm your address. This is usually done by referencing the electoral roll, therefore if you are not already registered then you should apply as soon as possible. You can register on the electoral roll for free and can register to vote here. At the Tipton, our manual approach also means that we can help in these situations. For any years where you have not been listed on the electoral roll, simply provide us with proof of address by the way of bank statements etc. for that period.
Current Debt
When you submit a mortgage application, any debt you have will be considered by lenders looking at your application. If you have large amounts of debt, mortgage lenders can consider this as a risk or, it may affect your affordability assessments. If you do have debts, you may still have your mortgage application approved providing that the lender can satisfy that you can afford the additional mortgage loan.
Deposit Amounts
Some lenders will need you to meet a specific loan-to-value (LTV) limits to be suitable for a mortgage. Therefore, if you have a small deposit, there may not be products available to you.
Here at the Tipton, we are dedicated to helping first time buyers get on the property ladder, with our 100% LTV Family Assist mortgages and 95% LTV mortgages. Our standard range of mortgage products allow for lending up to 95% LTV, making it easier for first time buyers to get onto the ladder by putting down a smaller deposit. With our standard Family Assist product, you can borrow up to 100% loan to value, or with our flexible Family Assist product you are able to put down a deposit between 1%-10%. For both products, we must have a total of 20% of the property value or purchase price (whichever is lower) as security. This can be done through either a savings deposit or collateral charge option, click here to find out more. Terms and conditions apply.
Job Role (such as contracting)
If you are self employed or work as a contractor, it can prove more challenging to get a mortgage approved. This is due to difficulty in proving proof of income and security of your role.
At the Tipton, due to the changing nature of the UK employment market we have tailored our acceptable contractor mortgage criteria to assist borrowers employed with short term renewable contracts. Contact us to discuss our criteria and eligibility further.
What should I do I have been refused?
If your mortgage application has been declined, you will receive confirmation from either your mortgage broker or the lender. It may be worth asking for information as to why your mortgage has been declined, as this will allow you to address the issue prior to reapplying. It is however important to remember that all lenders will have different criteria and just because one has declined your application doesn’t automatically mean everyone else will too. If you require more information about our lending criteria or eligibility, talk to us by calling us on 0121 557 2551, or completing our online contact form.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
ALL MORTGAGE APPLICATIONS ARE SUBJECT TO LENDING CRITERIA AND UNDERWRITING.