What are your next steps if you have made an application and had the Mortgage Declined by an Underwriter?
When applying for a Mortgage, there are generally speaking 2 steps, the first is the initial credit check where your application is scored based on the information provided and your credit report. This is typically done by a computer and this could be where the whole “computer says no” comes from.
The second part of the process is where your application is assessed by a human underwriter. Their job is to to look at your application as a whole – so whilst you may fit criteria and pass the credit check there could be something that the underwriter does not like.
Presumably, if you are reading this post your Mortgage application has been declined by an underwriter, this post will look at some of the reasons why that may happen and then what we can do to move forward.
Why was your application declined?
This is the big question really. There are various reasons why an underwriter may decline your application so lets look at some of the potential reasons:
Inaccuracies on your application – This could be anything really, you may have declared that your income was higher than it is and when assessed they determined it was lower – this could be that you included your bonus where as the lender may only accept 50% of a bonus for example. It could be that you missed off a commitment – a good example here could be a student loan, as you are not making monthly repayments directly like other loans it may just slip your mind as it is deducted at source.
Bank statements – We do not get many declined applications, but where we do it tends to be due to underwriters discretion because of bank statements. As an example, you may be gambling £5 a night, but if the underwriter sees 25 transactions for 20 pence each, that is deemed worse than maybe £50 on a Saturday. The reason being is that the person gambling once a week is just spending their money once a week, the person making multiple transactions a day is potentially showing signs of a habit or addiction.
Underwriters Discretion – This is always a difficult one to overcome. Everything fits criteria, but if you are pushing all of the boundaries, the underwriter may just take the view that the risk is too much for them. As an example, you are lending the absolute maximum possible, you are putting down the minimum deposit possible (which may be a gift), you have some history of late payments, maybe even a default and you have only been in your job for 3 months – all of that combined may just make the underwriter think there are too many limits being pushed for them to accept the case.
What can we do?
The good news is that there are usually things we can do. Initially we try to understand why your application has been declined, sometimes the lenders do not explain why – which is not very helpful but it avoids getting in to an argument about it which I suppose makes it easier for them.
If you have not had the reason explained then we can look over your situation and try to understand the problem(s). Once we have done this we can then start to collate some documents and information and start to discuss your case with lenders before making any further applications.
One underwriter declining your application does not mean they all will and it is can just be a case of finding the lender for you. This is something that we can help with, that does not necessarily mean you are going to be paying higher rates, it just means your options may be a little restricted.
If an underwriter has declined your application, do not worry at this stage. Get in touch, we can have a chat about what has happened and then decide how to move forward and try to get you a Mortgage.