Declined Mortgages

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Declined Mortgages Frequently Asked Questions

Richard Crow answers the most frequently asked questions on Declined Mortgages.

In less than 15 minutes, you’ll know a lot more about what to do if you’ve had a mortgage declined.

Can I still get a mortgage after being declined?

The answer really depends on the situation of the client. If it’s for credit reasons, it depends how bad the issues are, however, in most cases we can place people with another lender. That includes, whether they’ve been declined directly by their bank or if we’ve attempted to get them a better deal than we thought we might be able to get. We’ll typically have a fallback option in this scenario, however.

It’s important to know though, that on some occasions we just can’t get what the clients want. However, when that does happen, we always give our clients a personalised blueprint of what they need to do.

Why would you get declined for a mortgage?

There are three main reasons why people get declined for a mortgage. The first one is to do with levels of debt. Banks look at what is known as ‘debt to income ratio’ and some lenders won’t lend if you have a debt to income ratio over fifty, for example. Lenders do get scared off when they see people have a high dependency for credit, as they would see this as a risk to your ability to repay your mortgage.

Secondly, people are declined due to insufficient income and affordability. Lenders need to deem that you can afford to pay the monthly mortgage repayments. They do all have different rules, for example, you might be in receipt of a government benefit that not all lenders accept that benefit. Perhaps you receive overtime and some lenders will only consider 50% of that overtime, but 100% is needed to meet affordability.

If you’ve been Self-Employed for just a few months, that’s not always going to lead to a decline but many lenders need three years worth of Self-Employed accounts. We have lenders that will accept only one years’, providing you fit the rest of their criteria.

Thirdly, your credit score can affect your ability to secure a mortgage. Things like late payments on financial commitments, Defaults, CCJs and Bankruptcy affect your credit score. Not being on the electoral roll or being financially associated with someone that has bad credit, maybe an ex-partner, being over your limit on your credit card.

All of these things will affect your chances of not just getting a mortgage but also getting the best rates available. If you attempt to do any of this on your own you are really leaving this to chance and increasing your chances of being declined.

Speak To An Expert

What we really enjoy is being part of one of the most important purchases in people’s lives. It is incredibly special to witness the excitement and emotion when people receive their mortgage offer.

Whether it’s your first time, moving home, investing or just looking for a better rate we would love to hear from you.

At what stage can a mortgage be declined?

You can actually be declined at any stage of the mortgage process. You can be declined at the consultation stage with me, if I see that it’s a no go for the application, I sadly have to tell the clients this and certainly won’t proceed with an application.

Decision in Principle stage

A Decision in Principle is a conditional agreement from the lender confirming the amount that they are proposing to lend you. Then they check your credit, affordability, maybe your employment history and they may decline you here due to not meeting their full criteria. Often, at this stage we can take you elsewhere where you do fit the criteria.

Underwriting stage

The third stage is after the Decision in Principle. Sometimes clients get what’s called a provisional access with a refer and an underwriter takes an in-depth look at your situation and decides that they’re not going to lend to you. It’s always important to ask the reasons why you got declined so that we can potentially address the issue at the next stage.

If you get declined at the underwriting stage, after the application, there may be information missing from the application form. They may not be satisfied with the documentation that’s been provided, or maybe you don’t meet their affordability criteria. In some cases the hard credit search may have identified a reason that wasn’t noted on the previous check. At this stage I’d highly recommend speaking to a mortgage broker, because you may not have time to waste.

Survey stage

The next stage that you could be declined is due to the property lenders instructing a survey on the property to ensure that the property is worth the money they’re lending, but the valuer has flagged up an issue to the lender. This could be something structurally wrong with the property, maybe it doesn’t have a working bathroom, kitchen or utilities or needs substantial repairs. In this case you may have to go back to the seller and renegotiate your purchase price.

At this point you may wish to get a full structural survey performed on the property to make sure you’re fully aware of everything that needs doing and you may need to be willing to walk away from the property. It may also be that the valuer has said that the property is not worth what you’ve agreed to pay, which will reduce your borrowing amount and if you wish to proceed you may need to put in extra deposit, if the seller is unwilling to renegotiate.

At a later stage

You may also get declined way down the line, if the legal process drags on. Mortgage offers generally last six months and you’ll need to reapply for your mortgage if it does not complete in this time.

Does having a mortgage rejected affect your credit score?

Being refused for credit in itself won’t hurt your credit score. Your credit report will show that you applied for a mortgage, but it will not show whether you were accepted. However, being refused for a mortgage can often lead to more attempts and each application leaves a hard search on your report, which gives away the fact that you were declined.

What should I do after my mortgage has been declined?

In the very first instance, ask as many questions as possible as to why you were declined. Don’t just accept it and walk away, getting more information can help you get advice on what you can do to improve things moving forwards.

The main thing people can do is contact a broker and feed as much information as possible to the broker, as this will make their job faster and easier and remove that stress and anxiety from the process for you as quickly as possible.

How can a Mortgage Broker help if you have had a declined mortgage?

Before you apply to a lender for a mortgage, there are various steps that you can take to improve your chances of success. You can use a broker initially to check your application and ensure it’s being prepared correctly. With extensive knowledge of the mortgage market they can then present your application to the lender that is most likely to approve it, rather than you just picking the lender that you bank with.