We speak to a lot of people who have had a mortgage application refused or declined. The aim of this post is to have a look at the reasons for that. We can then look to see if or how they can be overcome.
Why was the mortgage refused?
Lets look first at why your application could be refused. There are a number of reasons as to why your mortgage application could have been declined.
Credit score decline
This is typically the most common. Usually where there is a credit score decline there is an underlying reason. Credit score decline would usually come down to one of 2 things. The first is that there is something that is dragging your score down, you may know what that issue is or you may not. If you do, that’s a good start and it can help us to overcome it. If you do not, we can try and help to get to the bottom of it.
The second reason you may fail the credit score is down to a combination of things. That could be things like low income, high debts, gifted deposit, reliant on benefit income – individually they all fit criteria and pass affordability but all combined might make the lender a little nervous.
The important thing to remember is that your credit score on experian, equifax etc is completely different to the score your application is given by a mortgage lender.
By comparison a criteria decline is very simple. It simply means something with either you or the property is outside of criteria. This could be as simple as earning £17,999 and the lender has a minimum income requirement of £18,000. It could be some adverse, it could be anything really. This may be very easy to overcome with a different choice of lender or it could be that the issue rules out a lot of lenders.
This is slightly different to the others as affordability would not usually result in a mortgage application being refused. What would typically happen is that they reduce the mortgage amount – although that in itself may be as good as a decline if the drop is significant enough.
This is a little bit like the credit score decline. Everything may fit criteria and it may pass affordability but it could be that you are pushing too many boundaries and the underwriter is not happy to sign off the mortgage. You do not see a lot of underwriters discretion declines these days, but they do still happen.
Typically it would be where there is a lot of debt or affordability issues.
How can we overcome a refused mortgage application?
The first thing we would do is discuss your situation and what you are trying to achieve. In order to do that, we usually have a quick phone conversation and ask a few basic questions:
- Property value or purchase price,
- Mortgage required,
- Commitments (loans/credit cards etc),
- The issues you are aware of or reason for decline.
With these things we can usually give you a good idea of whether or not we can help and we also aim to give you an idea of what the likely rates will look like.
At that point if you are happy to proceed we can go to the next steps and start to get a little more information and paperwork. But we do not want to start getting everything together if we can not help or you do not like the options we think will be available.
In short, we can usually give you a good idea of what can be done within 5-10 minutes of your time (and ours).
What are the next steps?
Get in touch. You have nothing to lose bar 5-10 minutes. Lets see what we can do.