It is inevitable that some Mortgage applications will get declined, that goes for whether you apply directly or through a Mortgage Broker but here we look at the reasons behind the Declined Mortgage Application to see the how’s and why’s.
You would like to think that if you apply through a broker there is less chance of an application being declined as we have experience doing this every day but even we get declined applications. I would say on average we get less than 2 declined applications a year, but it does happen as we will never get it right 100% of the time.
The reason for this post is to look in to why they are declined. Sometimes it is the brokers fault, sometimes the applicants fault, sometimes there is nobody to blame and it is “just one of those things.”
What to do if my Mortgage Application is Declined?
There are various reasons as to why a Mortgage application gets declined, so we will go in to those reasons in a little more depth below…
Declined based on Criteria
This is something that can happen periodically, sometimes on a technicality, sometimes because not every bit of criteria is made available and so it is near impossible to prevent a case being declined where it was not known there was an issue.
You would like to think that an experienced Mortgage Broker would use their knowledge to pick up on any potential issues to prevent a case being declined on criteria but periodically things will slip through.
Decline based on Affordability
This is one of those things I would like to think will never happen with us. Affordability is the one thing we can 100% check upfront and so we should never be getting caught out by this if we have done our job correctly. It is something you may get caught out by if applying directly as you need to ensure you are giving the figures that the lender wants. As an example some lenders may only accept 50% of benefit income or average out the last 2-3 years income if self employed.
The affordability checks are only as accurate as the information entered and so you need to ensure the figures are being put in as the lender would expect.
Decline on Credit Score
Where you are declined based on Credit Score or the more common phrase “Computer says no” approach, it is tricky to overcome that (although not impossible with some manipulation of the lenders systems). Ultimately it is the lenders way of filtering our en mass the customers they are unlikely to want to accept. It is not an exact science, but it helps them to save time.
This is more for high street lenders only and less so for smaller building societies or specialist lenders who typically do not credit score, but instead credit check.
Declined on Discretion
An example of this could be where everything fits criteria and passes affordability but if you have multiple issues – lets say adverse, tight on affordability and the deposit is gifted, the underwriter may decide that although everything fits on paper, they are using their discretion to not lend because too many boundaries are being pushed to the limit.
There are any number of reasons why your Mortgage application has been declined. The key thing is to not worry. At the last count we had access to over 80 Mortgage lenders. That means 80 affordability calculations, 80 lots of criteria, 80 different underwriters etc. It is very rate that being declined once means you can not get a Mortgage. It may mean rates start go up a little, but even that is not a definite.
If you have had your Mortgage application declined, get in touch, we can take a look and see what we can do for you.