Six Reasons Your Mortgage Application Might Be Rejected and How to Fix It Before You Submit
Going through the mortgage process, whether you are a first-time buyer or looking for a new home, will always be a big step in your life, and potentially stressful.
In previous years, getting accepted for a mortgage has become increasingly difficult as lenders are becoming more stringent and specific about what criteria must be met before they can be approved.
The Online Mortgage Advisor team shared some of the top reasons your mortgage can be rejected.
Six reasons your mortgage might not be accepted
1. You have a bad credit history
It’s pretty obvious, but a bad credit history means that potential lenders will be concerned about your ability to manage your debt and pay off your mortgage on time.
Even if you have no credit rating, it can be more difficult to get a mortgage because lenders have no proof that you are able to pay off your debts.
2. You are not earning enough
Affordability is one of the most important factors a lender will consider when deciding whether or not to lend to you.
On average, mortgage lenders will offer mortgages based on 4.5 times your salary. So make sure that the amount you are requesting reasonably matches the amount of money you are receiving each month before submitting the request.
3. You have used “Buy now, pay later” formulas
Buy Now, Pay Later, programs like Klarna and Clear Pay are a relatively new phenomenon, and mortgage lenders don’t particularly like them.
Lenders are cautious when they see Klarna on statements as it may suggest someone is living beyond their means, even if they are making their payments on time.
4. You only have a small deposit
If your deposit is very small, around 10% or less, it could mean you’re less likely to be accepted for a mortgage, and if you are, the rates won’t be great.
When you have a small deposit, your lender will need to invest more in the property, which means they might be worried about your repayment. Make sure you took your time to save as much as possible to have a bigger deposit.
5. You have taken out a personal loan
Even if you pay them off on time, payday loans are listed on your credit report for six years, and some lenders may think that a payday loan means you will have a hard time managing your money and therefore paying it back. mortgage.
Make sure the loan is fully paid off before you apply for a mortgage, and talk to a mortgage broker to see which providers will be willing to offer you the money you ask for.
Did you know that there are a number of ways to stay up to date with the latest money-saving news and Daily Record benefits?
You can join the conversation on our Money Saving Scotland Facebook group for money saving tips, benefit news, consumer help and advice, and the latest shopping deals.
Sign up for our weekly Record Money newsletter to get our best stories straight to your inbox. You can register either by entering your email address in the registration box above on this page, or by clicking here.
6. You are not registered to vote
Mortgage lenders will use the electoral register to make sure you are who you say you are.
Registering to vote increases your credit score and increases your chances of getting a mortgage. Also, the longer you stay at an address, the better, as this will show the lender that you have stability.
Get the latest news on savings and benefits straight to your inbox. Sign up for our weekly Money newsletterhere.