For the majority of people living in the UK thinking about buying a home, they will most likely be looking at applying for a mortgage in order to make this happen.
This usually requires a lot of preparation beforehand, as well as a lot of paperwork, however even if you think you have put together the perfect mortgage application, doing everything right you may still end up being rejected and not always for the reasons you would think. We take a look at why your application may be rejected.
Too many changes in your job history
Lenders will be looking for signs of creditworthiness when assessing your application, in order to make sure that there is enough stability in your life so that it will be possible for you to make prompt repayments each month. However, if you have gone through a number of different of jobs or professions within a short period of time, this may put off lenders accepting you for a loan. Ideally, mortgage providers like to see borrowers who have been in the same job, with a stable income for several years ? as it shows stability and an increased likelihood of repayment.
Suspicious activity
Mortgage applications will involve checking your credit files and bank statements for any suspicious activities. Whilst not all mortgage providers have the same criteria, typical flags include regular gambling and applications with payday loans lenders. The latter is based on the idea that those looking for quick, short term income may be financially stretched and unable to cope with financial commitment of a mortgage.
Early retirement
According to mortgage experts, an early retirement can also be another reason why your mortgage application may end up being rejected. This is because whilst you may be in good financial standing, you may lack the cash to actually buy a home. As you will be having little income coming through, this can decrease the chance of lenders deciding to approve you for a loan.
You just bought or leased a new car
If you have just bought or leased a new car before deciding to apply for a mortgage, this could increase your chances of being declined for this loan, explains The Express. This is because car payments will increase your monthly debt obligations if you have taken out a loan in order to purchase a vehicle. This can leave lenders unsure as to your ability to promptly pay back a mortgage.
Your deposit is too small
You may end up being declined for a mortgage if your deposit is too small, with this more likely to be the case if you haven’t scored highly on other areas of a mortgage providers criteria. As a general rule of thumb, the larger the deposit you have, the greater the chance that you will then be approved for a mortgage (and also receive a better rate too). The mortgages that offer 100%, 80% or 70% are usually reserved for good credit scores, first-time buyers and those considered safe borrowers. Therefore try to boost your savings as much as you possible can before you decide to make that application.
You are not on the electoral roll
Have you made sure that you are on the electoral register? This can often be a deciding factor as to whether or not a lender will approve you for a mortgage, as if there is no way of confirming you are who you say you are, this will lead them to become suspicious. Getting on the electoral roll if you aren’t already is very easy to sort out. Simply contact your council in order to get added to the register, or do this yourself at www.aboutmyvote.co.uk
Your credit report is linked to someone with bad credit
Unfortunately, it may be the case that your report is linked to someone else where you have a joint credit agreement, and this can impact your mortgage approval chances. As a result, make sure that you contact credit reference agencies to dissociates from any ex-partners or those you no longer share a connection with who may be financially linked to you.
