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My mortgage has been declined. What should I do?
If you have had your mortgage declined by your bank or building society, the first thing you should do is try to find out why.
Your residential mortgage or buy to let mortgage may have been declined for a number of reasons. It may be that it does not meet the affordability assessment for the loan to be agreed.
It could be that the property does not meet the criteria of a lender, and as a result they cannot consider the application.
It may even be that it just does not pass the lender’s credit score due to not scoring enough points on their internal system, or bad credit is present.
Hopefully the lender that declined you will be able to give you a clear idea as to why your application has not been successful.
This will allow you to explain the situation to a mortgage adviser who can do some research for you.
It would be recommended to look for an independent mortgage adviser with access to the whole market.
If you are unable to tell them what the reason was for the decline in the first place, they won’t be able to understand your situation to discuss it with other lenders in the market place.
It may be that what was unacceptable with the lender that you first approached, can be accepted by another.
Discussing a situation in full, making sure to disclose all details could be what saves the situation going forward.
It is not guaranteed that a new mortgage adviser will be able to help you, depending on why it was declined in the first place, but you may have other options.
Make sure that the mortgage adviser that your approach is regulated by the Financial Conduct Authority.
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My mortgage has been declined, can I appeal?
With some lenders, if they decline your agreement in principle or full application, they have an appeals process that you can follow in order to get the decision overturned.
Firstly, you will want to find out exactly why they declined it in the first place to be confident your argument is strong enough to make them change their mind.
There is a good chance that if a mortgage has been declined at full application stage, it has been assessed thoroughly by an underwriter looking at the full situation and your documents.
If they have been declined a mortgage, this may be after a large amount of due diligence being carried out.
This is not always the case, and they may have simply made a decision without assessing all of the details.
For example, if they felt that the mortgage was not fully affordable and therefore declined it, perhaps there was other income in the background that was not taken into account which may have made the mortgage affordable.
If there was adverse credit on your file, but it turns out the creditor was in error, and you were able to prove it and have it removed from your credit file, the lender may change their mind.
There are a large number of reasons why a mortgage could be declined so first of all find out what happened.
If you genuinely believe that the lender has made an error in not accepting your application and you can demonstrate why, talk to them about their appeals process to see if there is a chance of saving the application.
Lenders have their own way of dealing with appeals and some may not offer this route at all. You should perhaps consider whether it would be quicker to follow the appeals process or look for a new lender.
What to do if your mortgage has been declined on bad credit?
It may be that your mortgage has been declined due to adverse credit. If this is the case, the said bad credit may not be an issue with another lender.
Lenders have their own rules on what is and is not acceptable when it comes to credit conduct.
If you believe that you have adverse credit showing on your file, you should get a copy of your credit report.
You can do this by going to Check My File, where you can sign up for a free trial.
Your Check My File credit report will show you data from credit reference agencies such as Experian, Equifax and Transunion.
If you give your credit report to a mortgage adviser and explain what has happened, they may be able to locate another lender that is willing to help.
It is important that your mortgage adviser knows full details of your situation and the average credit that has caused the problem.
Most mortgage advisers will be willing to offer you a free consultation before any chargeable work is undertaken.
What are the options if mortgage has been declined on affordability?
If your mortgage has been declined on affordability, there may be other lenders that can still offer you the loan amount that you need.
Lenders all user own affordability assessment, using different income multiples, taking into consideration full income and outgoings.
What income is variable, for example earning commission, bonuses, or hours that fluctuate, some lenders are better than others when it comes to including all of the income.
If you are self-employed, for example running a limited company, lender’s maximum loan amounts can vary by a long way depending on how they underwrite the income for the mortgage.
If they use your salary plus your share of net profits, this may give you more lending potential than if they work off just salary plus your dividends within the year.
Also, some lenders can work off your latest year’s figures whereas some take average.
As a result, it would be recommended to look for a mortgage adviser that could fully understand your income, and source a lender that they believe can lend you the amount of money that you need.
What are the options if mortgage has been declined due to the property?
Your mortgage may have been declined due to the property that you wish to buy or refinance.
There can be many reasons that a lender may decline a property, which may not mean that it will be outside of criteria for every lender.
For instance, if the property had a flat roof, not every lender would accept this. If it was an ex council flat with deck access, again, it will only meet the appetite of some lenders.
The good news is, lenders have their own criteria when it comes to which properties they can allow, so a decline from one lender may not fully stop you getting your mortgage.
If you talk to a mortgage broker giving them full details of the property, telling them any concerns that you have with it, they can look for a lender accordingly.
Does it make it harder to get a mortgage if you have had one declined?
It does not necessarily make it harder to get a mortgage, if you have had one declined.
Most lenders will ask whether you have ever had a mortgage declined so you will be obligated to disclose this.
This does not always affect the next lender’s decision. They will likely need to know more details about why the mortgage was declined in the first place.
If it is because it was outside the criteria, or did not pass a lender’s internal score, the next lender may be perfectly happy with this knowing that they all have their own individual criteria.
If you were to fail due to adverse credit, your next application would likely be with mortgage lenders that can allow the average credit that was a problem in the first case.
This means that a previous decline on a mortgage does not necessarily make it more difficult to place your application as long as it is meeting the new lender’s criteria.
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Why may a mortgage adviser still be able to get me a mortgage if it has been declined?
The reason that a mortgage adviser may be more likely to get you a mortgage, even if you have had one declined, is because they have the whole market to approach.
If you have just gone to one bank or building society, and it has led to a decline, your mortgage adviser will have more lenders to choose from.
They will get a full understanding of what has happened so far and then look for a new lender that may be willing to assist you.
It is of course not guaranteed that they will be able to find another lender that can accept your application, but most mortgage advisers will be willing to learn the full details of the situation, and to carry out some research for you.
Conclusion
If your mortgage has been declined by a bank or building society, it may not mean that it cannot be saved.
You may have the option to appeal with the lender that declined it, as long as you have a strong enough case for them to overturn their decision.
Alternatively, another lender may be willing to accept the application, on the basis that it meets their own criteria.
Finding a mortgage adviser would be recommended due to the large number of lenders that they can approach.
They will take the time needed to understand your full situation, and why the mortgage was declined previously.
If you would like I NEED ADVICE to match you with an experienced mortgage adviser to explain your options, please complete the contact form.
The information on this page is not tailored to any individual readers and should not be considered financial advice under any circumstances.
If you are seeking advice about a mortgage, you should consult a qualified professional.
