Mortgage Declined?

If you have received a mortgage decline due to a late payment there may be alternative options available to you.  With a late payment, what these options are will depend on when the late payment occurred, how much it was for, whether you’re now up to date, what type of payment it was for example if it was for your mortgage or a mobile phone etc.

You have a better chance of being accepted for a mortgage with a late payment if you have a bigger deposit and the more historic the late payment was the better.  The reason why you missed the late payment is also important to a mortgage lender.

Even after you have received your mortgage offer your mortgage lender can perform credit checks on you, therefore, it is possible to be declined a mortgage before completion. This is common if your mortgage is taking a long time to complete or your lender suspects that your personal situation has changed since you completed the application process.

To avoid being declined a mortgage before completion it is advisable to avoid any unnecessary credit checks such as for a new sofa on interest-free deals, car loan, store cards etc.

If you have had your mortgage declined before completion and your lender will not overturn your decision, it’s a case of starting the process again with a new lender who is a better fit for your situation.  This could cause the property chain to fall, and money could be lost by all parties.

If you’re buying a lease hold property for example an apartment there will usually be a ground rent charge to factor in to your affordability.  Ground rent can vary significantly between properties therefore it’s important to gather all relevant information from the estate agent ahead of starting an application.

There are rules within mortgage criteria around ground rent and how much this can be and what rights the leaseholder has on the property therefore it is possible to get your mortgage application declined due to the cost of the ground rent.

There are also future increases in ground rent rules that your lender will consider as part of the application process.

Shared ownership mortgages are available specifically for customer purchasing a percentage of a property under the scheme. These consider ground rent and any other fees that are payable.

As part of a regular mortgage application your application can be declined by an underwriter. The reason why your application has been declined by an underwriter will not be disclosed.

Popular reasons such as non-disclosures on the application form, suspected fraud or money laundering, failed credit score following a more in-depth lender check, or anything else.

A mortgage broker will help you overcome any underwriter declines and find a more suitable lender for your situation.

A mortgage decline on affordability can occur because of undisclosed credit commitments on the application or inflated/irregular income.

A solution for those who have been declined on affordability would be to consider another lender who is more suitable for your situation. In a small number of cases, it might be possible to overcome a mortgage decline on affordability with lots of evidence.

If you are going through a debt consolidation remortgage application, then working alongside a mortgage broker and working out the money saved per month by doing this will help your application.  However, doing a debt consolidation mortgage application without advice is not recommended as you could end up in a worse situation and lose your property.

Being declined a mortgage following a valuation should alert you to the fact that your mortgage company do not feel that the property you are buying is worth what you are paying.

This should not be taken lightly, and you need to really think about how much you are wanting to buy this specific property or look for another.

Mortgage valuers are professional people, and they are experienced and knowledgeable at what they do.

The options you have when you have a mortgage declined after valuation are to renegotiate on the purchase price with the valuation figure in mind, find lots of evidence from similar properties that it is worth what you’re paying, or pull out and buy another property.

More often than not, negotiation is the most popular course of action due to the fact that other purchases will more than likely have the same problem as you.

Having your mortgage declined after a decision in principle (DIP) is common.  A DIP is only a rough estimate of what you can borrow and is no way and shouldn’t be considered as acceptance of a mortgage.

In fact, many would argue that a DIP not worth the paper it’s printed on, until the application process is started, and a hard search is performed and completed then you’ve not been approved.

You can get declined a mortgage following a DIP for any reason, credit score, property type, income mix, or anything else.

Seeking help from a good mortgage broker will ensure that your mortgage application goes with the right lender the first time!

You’ll see lots of properties that get marked as sold as the buyer has presented a DIP document to the estate agent, however, a few weeks later it can be back for sale as the property has fallen through because the buyers application had been declined following the DIP.

It is possible to get your mortgage application declined right up until completion.  If there’s been a long time since your application, maybe your property chain is taking a long time, or your lender suspects that your personal situation has changed then they will perform new affordability checks and credit score you again.

Being declined after offer can he heart breaking for some customers as it can result in them losing lots of time, money, and possibly their property chain will fall through.

Most of the time we’ll need to start again with the mortgage process and find a lender that is more sympathetic and/or suitable for your new situation.

Avoiding any credit searches after you have received your mortgage offer will help your chances of not getting declined.

Again, very similar to a valuation, if your mortgage is declined following a survey then this should not be ignored.

Surveyors are professional people, and they are experienced at what they do, their findings should always be looked in to further.  Not doing this could result in you having problems in selling the property in the future which would affect it resale value.

The popular reasons why a mortgage gets declined after a survey are:

• Cladding.
• Damp.
• Japanese knotweed or similar.
• Construction/structural problems.
• Asbestos.

As part of the application process lenders will look at your bank statements, initially up to 3 months and they then may request further statements or statements from different accounts including business ones.

Lenders will not like large unaccounted for transactions, gambling, pay day loans, lots of transfers to and from other accounts etc.

If your mortgage is declined due to your bank statement conduct, then we may need to look for a new lender or have a good explanation with evidence.

For example, they see a large transaction of £3,000 enter your account, maybe you got this from a recent private car sale.  Evidence that could prove this would be the online listing and the change of ownership form from the DVLA etc.

Service charges on leasehold properties can be a significant cost and these need to be factored into the application from the outset.  Your mortgage lender will look in to the history of the service charge and see that the increases have been in recent years and predict what these will be in the future.

You’ll need to demonstrate that the service charge is affordable to you both now and when it increases in the future.

If the freeholder has badly managed the service charge within the building then a sky high service charge will make the property fall significantly in the future meaning it’s high risk for the lender.

To reduce the risk of being declined a mortgage due to the service charge getting as much information from the estate agent is important so you know what you’re looking at.  Service charge will also be picked up later in the process as part of the conveyancing also.

To conclude about being declined for a mortgage, there is a lot that can go wrong along the way and time and money can be wasted without a good mortgage broker by your side and doing your research.

Experience and knowledge are vital and the faster that a potential decline can be picked up in the process the better.

Getting a mortgage is not simple about getting the best interest rate, it’s about selecting the best lender for your personal situation.  All lenders have different criteria aimed to help various groups of people.