Six Reasons Your Mortgage Application Might Be Denied and How To Fix It Before Submitting It



Going through the mortgage process, whether you are a first time buyer or looking for a new home, is always going to be a big step in your life and potentially even stressful.

In recent years it has become more difficult to get approved for a mortgage as lenders have become more strict and precise about what criteria must be met before you can be approved.

The Online Mortgage Advisor team outlined some of the top reasons your mortgage might get denied so you know what lenders are looking for and so you can avoid adding a mortgage denial to your credit history.

Six Reasons Your Mortgage May Not Be Accepted

1. You have a bad credit history

This is pretty obvious, but bad credit history means potential lenders are worried about your ability to manage your debt and repay your mortgage on time.

Even if you have no creditworthiness at all, getting a mortgage can be more difficult as lenders have no evidence that you can pay off your debts well.

2. You don’t earn enough

Affordability is one of the most important factors a lender will consider when deciding whether to lend you credit.

On average, mortgage lenders offer mortgages based on 4.5 times your salary. So make sure that the amount you ask matches the amount of money you will receive each month before submitting the application.

3. You have used the “buy now, pay later” schemes

Buy now, pay later, like Klarna and Clear Pay are a relatively new phenomenon and mortgage lenders don’t particularly like them.

Lenders are wary of seeing Klarna on bank statements as it can indicate someone is living beyond their means even if they make their payments on time.

4. You only have a small deposit

If your down payment is very small, like 10% or less, it may mean you are less likely to be accepted for a mortgage, and if so, the interest rates won’t be fantastic.

If you have a small down payment, your lender will have to invest more in the property, which means they could worry about you paying it back. Make sure you have taken the time to save as much as you can in order to get a bigger deposit.

5. You have taken out a payday loan

Even if you pay them on time, payday loans will be on your credit record for six years, and some lenders may think that a payday loan means that you are having trouble managing your money and therefore paying back the mortgage.

Make sure the loan is paid off in full before applying for a mortgage, and speak to a mortgage broker to see which providers are ready to offer you the money you want.

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6. You are not registered to vote

Mortgage lenders use the electoral roll to make sure you are who you say you are.

Registering for the vote increases your credit score and increases your chances of getting a mortgage. The longer you stay at one address the better as it shows the lender that you have stability.

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