Your mortgage can go wrong, even after being approved in principle. Here you can see the most common reasons why this can happen.
How often do mortgages go wrong?
Not many mortgages are declined beyond initial approval but is does happen. It’s important not to set your expectations too high at application stage. You can not be completely sure about your mortgage until it completes and you have the keys to your new home.
Does using a good mortgage broker reduce the risk of a decline?
Yes, for a number of reasons. A good broker will check criteria and make sure that you meet the lenders basic requirements. Brokers have a trained eye to spot any potential issues with your application. Your broker will also be familiar with the way that every lender operates. Some lenders are more selective than others. If your mortgage does decline, your broker will usually be able to successfully place this with an alternative lender. If you go direct to a bank you will be left with no alternatives, but a good broker will scan the whole market to find you a solution.
What are the most common reasons for a mortgage to be declined?
None Disclosure:
If the lender discovers a financial outgoing that they are not aware of. Lenders check bank statements and if they find outgoings that have not been disclosed at application stage then this may cause a decline. This is why it is important to make sure that you provide accurate information. A typical example is child care fees.
Income:
If the income you disclose at approval stage can not be verified by payslips or accounts then this will cause a decline. This most often happens when overtime declared at application stage can not be verified by payslips. Make sure that your income figures are accurate to avoid disappointment.
Property:
Mortgage lenders will decline if they are not happy with the property you are buying. This can be due to defects such as subsidence but it can also be due to the future saleability of the property. If your property is near commercial premises, close to a main road or surrounded by by empty, derelict properties then the lender may decline.
What if my property is down valued by the mortgage lender?
If the mortgage valuer that the lender uses to value your property reports a lower valuation than your purchase price then this is called a ‘down valuation’. The lender will usually be happy to proceed with this but your loan amount will be restricted by the lender as they will base this on valuation not the price that you are paying for thee property. This may mean that you will need a bigger deposit to complete your purchase. You can renegotiate your purchase price so that it is in line with the valuation. It is important to consider the risks of over paying for a property, such as the prospect of negative equity. Your mortgage broker will guide you through all of your options with this.
Can a lender decline my mortgage application for any other reasons?
Yes, a mortgage lender can use their discretion and decline your mortgage for any reason, in fact they don’t need to provide a reason. They are under no obligation to lend money.
What can I do if I have been declined for a mortgage?
Our brokers will react immediately to a decline, inform you straight away and work to place you with another lender to make sure that you do not lose your new property. This is why it is important to have a responsive mortgage broker.
What if I have been declined elsewhere?
If you have been declined by a lender directly or another broker firm then please start here and one of our brokers will call you shortly. Our brokers have full market access and regularly put recovery plans in place for home buyers that have been declined elsewhere:
Now that you have filled in this form why not find out more about us?
What we do:
- Search from a unlimited range of lenders for the best options available to you
- Offer completely unbiased mortgage advice
- Home buyer mortgages
- Remortgages
- Buy to let mortgages
- Equity release – expert advice for later life borrowing
- Life insurance
What we don’t do:
- Pay your mortgage – if you do not keep up on your mortgage repayments, your home may be repossessed.
- Charge you a fee – we are a fee free broker, delivering expert advice without the fees!
