If you have had a mortgage application declined, you may be wondering why. In the following article we are going to discuss some of the things that can cause them to be declined so that you know how to apply with a greater chance of success next time.
Income is Too Small
One reason why you your application for a mortgage is that you simply don’t earn enough. The lender needs to feel confident that you will be able to keep up with payments and if they don’t think you earn enough, they are less likely to give you a mortgage. To remedy this scenario, you could request a smaller-sized mortgage or even see if you can qualify for one of the many government-funded property buying schemes or a shared ownership.
As lenders are human, they are not perfect. Therefore, it is entirely possible that your application was unsuccessful because while your details were being entered into their computers, there was errors or mistakes in your credit file. You are not likely to be given any direct reason why your application failed. However, if it does happen, the mortgage company should give you information about the credit agency they used when checking your credit history and credit report.
You’ve Had Payday Loans in the Past
Payday loans often send a signal to mortgage lenders that you are not stable financially. As there will be any information about payday loans you’ve had in the last six years on your file, even those you paid off within the agreed time, it could be used against you. It’s worth noting though that whether having had a payday loan in the past is a problem or not will be different for every lender and you may still have a chance of being accepted for a mortgage – look online for poor credit mortgages and you might still be able to get one depending on your circumstances.
You Have Lots of Debt
Lenders need to feel confident in your ability to pay them back, when they offer you a mortgage. If you have lots of debt that you are still paying off, therefore, it is less likely that a lender will want to give you a mortgage. Before you try to apply again, you should sort out your debt first.
Too Many Applications for Credit
Every time you apply for any kind of credit, information is detailed of this on your credit file. Meaning that when you apply for a mortgage, the lender will be able to check your credit history and see that you’ve made lots of applications for credit in the past. This is often taken as a sign that you have financial difficulties. If you want to increase your chances of your application being successful then, you need to avoid applying for any more credit for at least a year before you need a mortgage.
Not on The Electoral Register
It’ s amazing how many people overlook the importance of this. If though, you are not registered to vote (whether you intend on voting or not), your application for a mortgage is unlikely to be successful. Being on the electoral roll at the address you’re currently living helps prove to the lenders you are who you say you are, and you live where you say you lie.