Finding The Best Mortgage Deal After Being Declined
Applying for a mortgage and being declined can be a disheartening experience. After all, there’s little that matches the disappointment of potentially losing out on your dream home.
At times, it might feel like you’re facing this problem alone, but this really isn't the case. Mortgage applications get declined every day and the reasons behind refusals are more nuanced than you might realise.
The most common reasons for having your mortgage rejected include:
- Bad credit
- Affordability issues
- Changes in property valuation
- Remortgaging refusal
- Underwriter refusal
- Your status as an expat or a non-British national on a Visa.
With that in mind, you needn’t worry about having to face these problems alone. Here at When The Bank Says No, our experienced mortgage and loan advisors can assist you in navigating declined mortgage applications.
Our mortgage broker service increases your chances at success on subsequent reapplication and eases your mind about your financial status or poor credit history being in the way of owning your new home. So here’s a detailed plan on what to do when you have been mortgage declined.
What to Do When Your Mortgage Application is Declined
Getting rejected by a mortgage lender might seem like a step back in your quest to own property, but it’s far from the end of the road. You can take it as a sign to reevaluate your finances and get help to move in the right direction.
Here’s what to do:
Improve Your Credit Report
The most common reason for mortgage rejection is bad credit as we’ll discuss below. So, getting your application declined could be an opportunity to get your affairs in order before your second attempt at a mortgage application.
Settle your credit card balances, repay any outstanding debt, and resist applying for a new mortgage, and these steps will boost your credit report.
Wait Before You Reapply
Most lenders do what’s called a “hard” credit check every time you apply for a mortgage. This check doesn’t only reveal your current credit situation, but it also adversely affects your credit for a temporary period of six months.
Being hasty to reapply for a mortgage is the worst thing you can do to your credit report. Aside from a potential second rejection, it might look desperate on your part and deter future lenders from giving you a chance.
Get Expert Help From a Mortgage Broker
If one lender declined your mortgage application, that doesn’t necessarily mean all of them will. Lenders have different considerations and requirements, so it's all a matter of finding the best deal that suits your finances and demands.
This is where a trusted mortgage advisor from When the Bank Says No can truly benefit you. Our experienced advisors have all the right information on how to improve your chances of approval. Thanks to our relationships with mortgage lenders and our ability to find the deal that best suits your situation, you will receive advice that matches your unique circumstances.
You can get started by talking to our advisors today. They can help you tie down the property you want by finding a lender who will be more likely to approve your application. They can also liaise with your estate agent, conveyancer, or both to make sure they’re in the loop.
Why Was My Mortgage Declined?
Going it alone, you could be doing everything by the book but still find your mortgage application declined. Here are the most common reasons you could face rejection:
Mortgage Declined After Application & AIP
An Agreement in Principle (AIP) is the first step you take before applying for a mortgage. It means the lender agrees that you might be a good candidate for a mortgage application.
Unfortunately, you can get an AIP approval but still get declined after applying. That could happen due to several reasons:
- Changes to your employment, e.g. losing your job
- New adverse credit, e.g. a new line of debt opened
- Changes to your outgoings, e.g. reckless spending
- Changes to your debt-to-income ratio
- Discrepancies or an error on your application that could signal fraud
- Bad credit was found after the initial checks
Lenders are notoriously flighty at any sign of trouble. They want guarantees that the mortgage will be paid in full and anything warning them of the opposite makes them default to rejection.
You might think your application was pristine, but depending on the lender, you might not be a good fit. Here’s how to navigate application and AIP rejections.
Mortgage Declined at Underwriting
Underwriting is the process of making sure all the documentation aligns with the lender’s requirements. You might fail at this step due to bad credit that wasn’t discovered during the application process. The underwriter can also find errors in the application and suspect fraud, leading them to scrap the application altogether.
Most underwriter refusals happen because of the incompatibility between the lender’s expectations and your paperwork. Finding the right lender for your needs should help you avoid this problem.
Mortgage Declined on Affordability
Affordability means your ability to pay the monthly mortgage payments on time with no issues. The factors affecting it are your income, the deposit you’ve paid, and your outgoing expenses.
The main reasons you could get declined on the basis of affordability are if you:
- Are self-employed
- Work multiple, irregular jobs
- Rely on over-time, bonuses, and extra shift payments to supplement your income
- Have a property let with its rent being part of your income
- Receive benefits, investment income, or retirement income
- Have a large debt-to-income ratio.
Managing the affordability issue isn’t impossible, but you might require a little assistance.
Mortgage Declined on Valuation
Valuation is the process of surveying the property you want to mortgage and seeing if it falls within the bounds of what the lender is willing to give you. It’s usually done by a professional surveyor and is either paid for upfront -by you- or added to your mortgage.
Getting declined on valuation isn’t uncommon. It could be due to:
- The property being undervalued by the surveyor
- Serious structural issues & problems with asbestos, cladding, damp, or Japanese knotweed.
- Non-standard constructions that include steel & timber frames, thatch, single brick houses, or high-rise buildings.
Not all lenders find these issues “deal-breakers” per se, and getting expert help can help you navigate valuation problems.
Debt Consolidation Mortgages
Remortgaging means consolidating pre-existing debts and your mortgage as a single payment, which makes them more manageable. This has the benefit of lowering monthly costs but also carries the disadvantage of prolonging the fulfilment period, which can add up with the interest rate.
Debt consolidation isn't the way to go for everyone for the aforementioned reason, as well as the fact that not all lenders approve the arrangement. To figure out whether you could benefit from it, reach out to an expert who can advise you on the matter.
Mortgage Declined at Exchange of Contracts
One would think exchanging contracts with the lender and breathing a sigh of relief is the end of the road. However, in some rare, albeit not impossible, cases, the deal falls through after exchange of contracts.
Some undisclosed information might come to light, making the lender reconsider the deal. Things like newly emerging bad credit, documentation errors, as well as suspected fraud.
You don’t have to face this alone, though. Hiring an expert advisor can point you in the right direction, ironing out any potential wrinkles and getting your mortgage approved.
VISA Mortgages
Being a non-British national on Tier 2 or Skilled Worker Visa, you can apply for a mortgage on your dream home. The requirements for this process are a little different, but it’s still possible to secure the property without issues. Spousal/Family Visa holders can also apply for a mortgage.
Having stayed in the UK for at least 2–3 years, the length of stay on your Visa, as well as having a good UK credit score, can all boost your application tremendously. To figure out how to approach the process, contact one of our friendly advisors today.
Expat Mortgages
If you’re a British national living abroad, some lenders may be hesitant in approving your mortgage application. It’s not entirely impossible, though, and you can still find a lender who will approve your application. It will also depend on other factors like credit history, income, and Loan to Value (LTV).
Just expect the interest rates to be a little higher because that’s how the lender ensures you’re a low-risk applicant.
Maximise your chance of approval with specialist advice from an expert in Mortgage Declined
How easy is it to get a mortgage after being declined?
Depending on the reason for the mortgage refusal, getting a mortgage could be as easy as changing the lender. However, your credit score, deposit size, and property valuation will always influence the kind of deal you can get from the lender, with low-risk candidates getting better deals.
That said, enlisting the help of a specialist in loan approval can boost your chances at approval much more than finding a lender on your own.
What factors improve my chances of mortgage approval?
Lenders always look for a candidate they’re almost certain will pay back the loan, in full, on time. Factors like a hefty deposit, a stable income, and a good credit score all make for a good candidate. Even if things don’t start off that way for you, they can improve. Positive changes in your credit score can also signal approval from a lender. Reducing the debt-to-income ratio through a permanent pay rise, paying off credit card debt, and avoiding new lines of debt can all make for a better shot at an approved mortgage.
Other strategies could be getting a credit card and spending and clearing the balance each month. This demonstrates to lenders that you are proficient when it comes to managing your money. You should also keep your bank account address up to date to improve your overall profile and update your address and contact information with your credit reference provider.
FAQs.
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Making mortgage approvals when you reapply a reality.
Having had a mortgage declined previously can make it difficult to find the mortgage you need, whether it's your second mortgage application or you've had multiple refusals. The good news is that securing the funds you need after you've previously been declined a mortgage is far from impossible. Our mortgage advisors are here to help you to find a solution when your mortgage application is declined.
Though many high street lenders will be unwilling to consider mortgage applications from those who have previously been declined, some specialist mortgage lenders are more open to considering those that the high street banks typically turn away.
When the Bank Says No has expert mortgage brokers who can identify the best mortgage deals for those who have made a mortgage application but been declined. We've helped many people secure a mortgage when they'd almost given up hope of finding a mortgage provider willing to lend to them.
