Why was my mortgage application declined?

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Sometimes mortgage applications do end up being declined. There are various reasons for this. Some declined applications could be avoided which I will explain below. Others however you would only find out after an application goes in.

We made a post last year about our declined applications which you can read here. Unfortunately we do get declined applications but never more than 2-3 a year.

I thought it would be a useful to make a post on why applications get declined. This may help to reduce the chances of your application being declined.

Reasons for Declined mortgage applications

Criteria

Earlier in the post I mentioned that some declined applications could be prevented and this is the prime example. Lenders have their criteria. This covers everything from employment, property types, commitments, age etc. Criteria is usually black and white although there can be exceptions. This should make it fairly easy to determine whether or not the application first criteria from the outset.

Credit Score

The good old “computer says no” decline. This is one of those things that is quite difficult to overcome. A lot of the lenders on the high street use a scoring system to filter out some of the applications.

Everything may fit, but the computer says no. Where this happens it is usually an indication of problems on the credit report. It is usually a good idea to get your credit report and have look through to see if there are any negative markers on there. You can obtain a copy of your credit report from CheckMyFile.com.

If you are declined on credit score, we usually need to look for a new lender. We may end up looking for a lender who is more flexible or a lender who does not credit score. The key thing to remember is that one lender declining your mortgage application does not mean they all will.

Affordability

Where you are declined on affordability grounds, this is usually something that can be prevented upfront by just using the lenders affordability calculator.

However, it is not always cut and dry. Sometimes lenders may assess your expenditure differently. A good example with this was a lady who went to the supermarket and bought her fathers shopping. He then gave her cash but that was not paid into the ladies bank account. The lender assessed the food bill as being almost double what her food bill was.

We were able to explain that every time she went to the supermarket there were 2 transactions on the same day and this was because one was her shopping and the other was her dads. With the explanation, the lender made an exception. This is good example of where we can help to get the right outcome.

Underwriters Discretion

This is one that is always tricky and one where a broker may be able to help. Ultimately it is one of those where you fit criteria, you pass affordability and the only reason for the decline is because the person making the decision has decided they do not like the application as a whole.

The most common time this happens is if you are pushing a few boundaries. A good example could be some adverse, in a new job and a gifted deposit. Everything individually fits, but combined might just be a little risky for the underwriter.

Where can Mortgage Success help?

Of the four reasons above, we can potentially help to overcome them all. Underwriters discretion is probably the only one we may be able to help overcome with the same lender.

The other 3 would probably need a different mortgage lender. However, I would like to think we would never get a declined application based on criteria or affordability. If that happens there is a good chance it means we missed something.

Before we submit an application we research the case. This is the bit that people do not see but can take the most time. We check the affordability, we cross reference your situation with the lenders criteria and we determine the lenders appetite for lending based on previous applications and discussions with our account managers.