20 Apr 2022
Common Reasons Why Mortgage Applications Get Rejected
The whole process of applying for a mortgage can be quite stressful and your hopes of getting on the property ladder or purchasing your next home can instantly be ruined by your mortgage application being rejected. The vast majority of people rely on a mortgage in order to purchase a property and getting accepted by a lender might end up being more difficult than you anticipated.
If you’re keen to apply for your mortgage but you’re concerned about getting rejected by mortgage lenders, we have listed some of the most common reasons why people are unable to get the mortgages they’ve applied for. Hopefully, this information can help you to ensure your application is accepted the first time around.
Errors in the application
One of the most common and often the most frustrating reasons why mortgage applications are rejected is because there is an error on the application form. It is important to ensure that you’re taking your time and checking that everything is correct whenever you apply for a mortgage. Even the smallest error, such as an incorrect spelling or house number, could result in your application being rejected.
Low credit score
All mortgage lenders use their own credit score to predict how risky you are to lend money to. If you have a really low credit score, this may result in them rejecting your application. Although lenders do not publish how they calculate their scores, it is beneficial to check your credit information before applying. This will provide you with the chance to improve your score if you need to. There are specialist lenders available to help with poor credit mortgages too.
Asking to borrow too much
Whenever you apply for a mortgage, in addition to looking at the Loan to Value ratio you require, lenders will also assess the maximum you are able to borrow. As a very rough guide, most leaders would provide you with a mortgage that is between 4.5 times and 6 times your salary. However, as every lender has different rules you will need to check how their affordability criteria works. Mortgage lenders want to ensure that you’re able to make the repayments on your mortgage if the interest rate increases, so if your income is not sufficient, they may offer you a reduced borrowing figure rather than rejecting the application completely.
If you would like to find out how much money you could borrow, it is beneficial to speak to a mortgage advisor. They can give you a much better idea of your maximum mortgage capability and, in turn, how much you’re able to spend on a property.
Self-employed workers / Zero Hours contractors
Unfortunately, when you’re self-employed or on a zero-hour contract, getting a mortgage can be more complicated. You will need to satisfy additional lender checks when making an application.
Self-employed applicants will need to provide certain tax documents and lenders offering mortgages to contractors will want to see twelve months' proof of income. Different lenders have different appetites for this type of lending, so its key that you research this by speaking to a mortgage advisor to ensure you’re making an application to the right lender for your individual needs.
Applying to the wrong lender
Simply put, not all mortgage lenders accept the same applications and depending on their lending criteria, your application might get rejected by one lender but accepted by another. If you don’t know much about the mortgage market, you will not only be wasting your time applying to the wrong lender, but rejections may also reduce your credit score. It is useful to get some tailored advice before you make your first application.
Looking for a mortgage advisor?
If you’ve had a mortgage application rejected and you would like to get some professional advice before you make another application, don’t hesitate to contact us at Mortgage Required. Our specialist team of mortgage advisors can provide you with the sound guidance you’re looking for and we have experience advising on all aspects of the mortgage market. As whole of market advisors, we will do all we can to help you find the perfect mortgage products for you at this moment in time.
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