29 Oct Reasons why your mortgage may be rejected

Applying for a mortgage and getting all of the relevant paperwork together can be stressful. It is even more stressful if your application is rejected.

Tougher rules have made it even harder for people to obtain mortgages, due to the lengthy application process and the factors surrounding the application.

But what could stop you from obtaining a mortgage and instead being left with rejection?

Poor credit history

If you have a poor credit history, chances of getting a mortgage – or any sort of lending – are impacted adversely. Potential lenders will be worried about your money management and your ability to pay back the money on time.

Equally, those with zero credit history could also find it hard to obtain a mortgage as they have no evidence to prove they can successfully and responsibility use credit.

We recommend getting your credit report, if it seems ok you don’t need to keep subscribing to them but if it is not as it should be, keeping an eye on it is worth, make sure any arrears become historic, the further away they become the more likely a lender will lend and make sure there are no defaults or CCJs that perhaps need contesting if you don’t agree with them.  Please feel free to use this link to you obtain your credit report which covers all the credit companies – https://www.checkmyfile.com/?tap_a=21902-1ce0c8&tap_s=159859-02d455&ref=tap

Small deposit

A deposit of 10% or less could see your application declined. Different lenders have different score cards and criteria when it comes to high loan to values because their risk is much greater, adding a gift from a parent or relative may improve your chances.  Save, save and save more if possible!

Not earning enough

One of the biggest factors when it comes to a mortgage is affordability and that comes from your earned income less your commitments.

As a rough measure, lenders will normally offer mortgages based on 4.5x of your annual household salary. You need you make sure that what you are asking for is affordable, many lenders have affordability calculators for you to check.

Payday loans and BNPL schemes

Payday loans are listed on your credit file for six years. And not only that, they show lenders that you may have struggled in the past in order to turn to a payday loan in the first place.

Klarna and Clear Pay can also have a negative impact on your application – these buy now, pay later schemes on bank statements could indicate that you are living beyond your means, even if all the money is paid back when due, you should check the impact and maybe not apply for these within 3 months of a mortgage application.

Voting

The electoral role is an important tool that mortgage lenders will use to verify that you are who you say you are. When you are registered, your credit score is also boosted slightly. In addition to this, the longer you are registered to vote at one address, the better as it shows stability.

When you are thinking about applying for a mortgage, a broker is a great option – you can discuss all of your needs and requirements as well as anything that may cause a stumbling block, like the points listed above. A good broker is highly skilled and should be able to recommend a mortgage that could work for you and your personal situation as trying to hunt the market on your own and being declined each time by a lender could inadvertently also affect your credit file.

Luckily for you, Best 4U work hard to understand your situation and use all of their experience and expertise to find the you the mortgage that is Best 4U! Call the friendly team on 01536 411 144 for more information.