What happens if your mortgage application is declined

Whether you’re applying for one of the recently reintroduced 100% mortgage deals or you’ve been busily saving a hefty house deposit to prepare for your purchase, the mortgage application process represents a stage of much worry for the average home buyer. There are after all many factors that can cause delays in processing your application, but what if the verdict is in and you’ve been turned down for a home loan?

Here at The Mortgage Bureau, we’ve helped countless people secure the finance they need to make their first or next property move. While our expertise and experience mean we can prepare our clients for the road ahead, we understand that the prospect of being declined is troubling.

In this blog post, we explain what happens if your mortgage is declined and the steps you can take to get your purchase back on track.

Understand why

One of the first things you should do after getting that no is understand why. There are many reasons why a mortgage application could be declined. A poor credit history, failure to register on the electoral roll, an excessive number of credit searches and associated applications, and the amount of debt you currently have can all have a bearing on how successful you are when applying for a mortgage.

Not matching a lender’s criteria is another common reason for a failed mortgage application as MoneyHelper explains:

“Lenders have different underwriting criteria and they take a number of factors into account when assessing your mortgage application. It could be based on a combination of age, income, employment status, the loan to value, or property location. An independent mortgage adviser has experience of the market and is likely to have a better idea of the underwriting criteria and suitability of different lenders.”

If your application was denied even after an agreement in principle was obtained, your lender may have found something that didn’t meet their criteria.

If in doubt, ask!

Still unsure why your mortgage application was declined? Although they are not obliged to tell you, you can ask the lender for feedback on why your application wasn’t successful.

Work on yourself

Making changes to your financial and credit position if this is the reason behind your failed mortgage application will ensure you’re in a better position to proceed.

As a rule of thumb, you need to prove that you are a responsible borrower, with payments paid on time and in full. With this in mind, there are several steps you can take to improve your credit rating and make it more difficult for lenders to say “no”.

Take your time

It can be a hard pill to swallow if the changes you need to make to improve your position take time. Going back to square one and losing out on a property you’ve fallen for is hard, but may be necessary if you want to get onto the property ladder.

A mortgage application can after all be declined due to a small deposit, which makes going back to the drawing board and saving a little more before returning to your property search vital.

Seek help

Working with an independent mortgage advisor like us is the key to overcoming adversity and purchasing the property you want. In comparison to making an individual application, collaborating with a mortgage advisor will ensure a complete view of the mortgage market to help you secure a product that is right for your circumstances.

Your local mortgage advisor will assess your position and find the most suitable deals to increase your chances of mortgage success and keep the risk of a declined application to a minimum. So, what are you waiting for? Get started today!