Feeling like you can’t get a mortgage can be confusing and deflating, especially if your heart is set on getting onto the property ladder. However, with up to 10% of all mortgage applications being turned down each year, it’s a common problem to have. So, what’s your next move? Should you simply try again and persist? Or are there things you can do to improve the chances of having your next application accepted? Here, we discuss the possible reasons for being turned down for a home loan, where to go for help and why the road to a mortgage agreement doesn’t always run smoothly.
Why was my mortgage application refused?
Each lender will have their own criteria and use it to assess your suitability. This will help them decide whether you’re in a position to meet the repayments both at the present time and in the future in case interest rates go up. As well as checking your application form, they’ll look at your credit report and any additional information they’ve requested. If these are at odds with the benchmarks they work to, your request is likely to be turned down. Common reasons for having your home loan application declined include:
– Your debt-to-income (DTI) ratio is too high.
– You have a poor credit history.
– You’re not on the electoral register.
– Your deposit is too small.
– You have too many credit applications.
– You’ve missed or have default payments.
– You’re newly self-employed.
What should I do if I can’t get a mortgage?
If you’ve had your application turned down, it’s a good idea to speak to a professional mortgage broker for help. They will know what different lenders are looking for and will be able to speak to them on your behalf. Because their knowledge is industry-specific, they may know of a lender’s criteria that better suits your personal circumstances and with whom you’ll have a better chance of success.
There might have been something on your application that caused it to be turned down by another lender, but it may be accepted by another. Applying for a mortgage can be a confusing process, but it’s one that a broker can support you with.
Should I apply for a mortgage again straight away?
While being refused a mortgage won’t impact your credit score, your report will show that you applied for one. Each application will leave behind a hard search, which can lower your credit score and reduce your chances of having a home loan accepted in the future.
It’s, therefore, important to speak to an advisor or broker about your situation before you begin applying to other lenders. Without the correct guidance, your mortgage applications could begin to work against you and create a vicious circle that’s difficult to get out of.
What can I do to improve the chances of having a mortgage application accepted?
If you feel like you can’t get a mortgage and you’ve had your application declined, it’s a good idea to address the possible reasons behind the decision. Now is the time to convince lenders that you’re a reliable borrower and ready for a mortgage, which is also something a mortgage advisor can help you with. If you’re a bit hit and miss with your repayments, make regular contributions towards your credit cards and utility bills, and try and pay off any existing debts.
You may also find that having a larger deposit for a home improves your suitability against a lender’s criteria, as will getting yourself on the electrical register. Whatever situation you’re in, a mortgage broker will help you to understand what you can afford and give you the best chance of having an application accepted.