Reasons your mortgage application may have been rejected
At Twin Pine Mortgages, we understand how frustrating it is when your mortgage application is rejected. Buying a house is an extremely exciting time, and a declined mortgage application can make you feel like this process has put a stop to your plans. If your mortgage application has recently been declined and you would like some clarity on the matter, then this is the blog for you. In this post, we will be discussing the possible reasons your mortgage application may have been rejected and will discuss what your next steps should be.
There is a lot that comes under this category. From the amount of debt you have to a lower credit score, affordability is one of the most common reasons for a rejected mortgage application (Which, 2019). When you apply for a mortgage, your affordability is tested, which means the mortgage lender will be looking at any current debt that you may have. So, while you may have thought that your car finance would work in your favour, it can sometimes work against you, especially if you have a lot to pay on it and aren’t showing signs of paying it off any time soon.
If you are struggling to pay off your debt, then we have found a great source of information on The Money Advice Service’s website for you to have a read through.
In addition to the amount of debt you have, having a low credit score can also be one of the major factors that have contributed to your application being rejected. If you don’t have any idea what your credit score is, then we recommend checking it for free on Experian, Clear score or Totally Money, most of which will provide you with a free trial for a limited time.
While it may be possible to get a mortgage with an average credit score, in certain circumstances, lender’s have to be very careful with who they lend money to, so you’re much less likely to be accepted for a mortgage if you have a bad credit score. This is because you will flag up on their system as a high-risk applicant.
Your vote counts
A surprising factor that you may not have thought about when going over the possible reasons that you have been rejected, is being registered to vote. This may seem very out of the blue, but simply registering to vote at your current address has a big effect on your mortgage application, as it confirms who you are and where you’re currently living.
What can you do now?
A rejected mortgage application can seem like a big blow, but it’s important that you remember that this will leave a mark on your credit file, which will be visible to other lenders that you apply to in the future. So we advise that you don’t rush into your next mortgage application. Instead, in order to give yourself the best chance of getting a mortgage approved next time, you first need to understand why you’ve been declined. Only after this can you try and address the issues we’ve discussed above.
For example, if you were unaware of your low credit score, then we advise you to work on trying to build a better credit score over time. However, it is very important that you don’t just start taking out lots of credit agreements in your name, as this will work against you. If, on the other hand, you are struggling to pay things off in time, then we recommend cutting your costs on non-essentials to prove that you can budget and make your pay go further.