Securing a mortgage is often a time consuming and potentially stressful time for future homeowners. And while we can take all the steps to ensure your mortgage application is accepted by a lender, there is always the chance an application can be declined. It’s not common, but we find that many of our clients worry it’ll happen to them.
Before we look into what happens if your mortgage application is declined, we’ll identify why an application may be declined. Keep in mind these circumstances are rare, but it’s always best to be aware and prepared for any eventuality.
Reasons why your mortgage application may be declined
There are a few reasons, including:
1. Credit issues
Sometimes a client passes credit checks with a lender at the decision in principle (DIP) stage. However, they are then declined at full application when credit checks are more thorough. This may happen because the client has had credit issues between the DIP and full mortgage application, for example.
2. Property defects
A lender may decline a mortgage application if the property survey highlights issues such as damp or structural issues. The risk of flood to property has also been a reason to decline an application. Unfortunately, we have no control over these circumstances or any foresight. The good news? These issues can sometimes be appealed. Often you’ll have the option to ask the seller to rectify any problems or find another more suitable property.
3. Down valuations
Let’s say you’re purchasing a house at £250,000, but the surveyor values the property at £240,000. If the seller will not renegotiate and you don’t have the additional funds to purchase the property, your application may be declined. This can be appealed, too.
4. Legal hurdles
Solicitors may raise issues over aspects of the property that the lender finds unacceptable to lend on. For example, if a driveway or road leading to the property is unadopted (a road is not publicly maintained). While there are lenders who accept an indemnity policy for this, some might not.
5. Underwriting
The underwriter assessing your application may decline if you have:
- Failed the mortgage repayment affordability checks
- Poor credit (you can get a mortgage with bad credit)
- Made mistakes on your application
- Experienced a change in financial circumstances
- Bounced direct debits or suspected fraudulent activity on your bank statements
- Income inconsistencies.
How we prevent application declines
Working with a mortgage broker to get a mortgage is your best chance of success. Our team knows the process inside out, meaning we will make sure your application looks its best before it’s sent to a lender.
To prevent your application being declined, we carry out thorough research prior to submitting it. If we suspect a lender may question something on your application, such as the property type, we’ll talk to the lender to get a better understanding of whether they’ll accept or not.
What we do if your application is declined
We’ll identify why your application was declined and base our next steps on that. Our expert mortgage advisers can appeal the decision on your behalf. If you’re declined because of a down valuation, we can submit a valuation appeal, for instance.
Find out why you were declined
It’s essential we identify why you were declined and actively work towards solving the problem. If it’s a credit issue, there are ways to improve your credit score. If there was a mistake on your application, we’ll help you to remedy it. Whatever the issue, we can work together to ensure acceptance upon re-submitting the application.
Submit your mortgage application to another lender
One of our options is to send your application to another lender with a stronger chance of acceptance based on your circumstances. It’s important to remember that while it feels disheartening to be declined, it’s not the end of the road.
Most independent whole of market mortgage brokers have access to between 80 and 100 lenders, so there are always plenty of options available if you need another one. It’s very rare an application is declined and we can’t replace it.
At Mortgage Synergy, we have bundles of experience placing mortgages successfully, and this, coupled with our industry contacts, means we’re in a great position to get your application approved the first time round.
For more support and guidance on applying for a mortgage or if you’ve recently been declined a mortgage, get in touch with us, we’ll be happy to help.
FAQs
Does being declined a mortgage affect my credit score?
Your credit score will not be affected if your mortgage application is declined. Your credit report will show that you applied for a mortgage, but it won’t reveal if you were accepted. That said, each mortgage application results in a hard search on your report. This can lower your score and reduce your chances of acceptance, so it’s best to spread out your applications to prevent this from happening.
If you’re worried about your application being declined, please contact us. We’ll ensure your application is in tip-top condition and ready to be approved.