Owning your own home is a dream for some people. But your mortgage application can be rejected for various reasons. Some can be resolved easily, while others cannot.
Providing False or Inaccurate Data
If your loan application is declined, you may have simply given your broker some wrong information. Professional document readers will examine every detail in your application closely. And their access to various information systems is extensive. So false statements or lies will therefore be discovered during the application process. On the other hand, you may even have simply made a mistake. Therefore, you should ensure that you provide as much accurate information as possible. Also, make sure any paperwork requested is accurate and current.
A Poor Credit History
Your credit score is crucial when a lender considers a mortgage application. Nowadays, a good credit score is a must when applying for any credit or loan. Your credit score will be negatively affected if you’ve missed payments on utility bills, personal loans, or subscription services in the past. However, don’t worry, because all is not lost. Free apps like ClearScore are great at providing you with helpful data on your credit score and how you can improve it. Work towards paying back larger debts first, and don’t apply again until your score improves.
A Mortgage Application Can be Rejected Over Debt
Aside from a poor history, any current debts are also considered when applying for a mortgage since it is essentially a large loan. And with the current cost of living crisis, the chances of missing payments are higher than ever. For instance, almost half of adults in the UK have missed at least one monthly payment over the past two years. So when mortgage lenders calculate your budget, they need to consider your ability to repay your mortgage against any other debts. These include arrears you may owe, student loans and higher purchases.
Alternative Structural Designs
You may not be aware, but the home you want to buy can adversely affect your mortgage application. You may not qualify for a mortgage depending on the construction materials used in the house you want to buy. This is known as non-standard construction. For example, mortgages for church conversions are more difficult to acquire than mortgages for new build or established brick dwellings. Other examples include historical homes with thatched roofs and steel-framed buildings such as former offices or old warehouse renovations.
Working for Yourself
Your employment status is intensely examined when applying for a mortgage. And unfortunately, being self-employed can make it more challenging. It may be rewarding to be self-employed, but it presents risks to lenders. The reason is that self-employment is uncertain. And the type of business you own can affect how much you make per month. The lender’s point of view might seem a little unfair. But you need to consider your ability to consistently repay any loan or mortgage. Mortgage lenders typically like to see consistency when making a decision.
Getting a mortgage isn’t as easy as it once was. And with good reason. But there are some things that can affect it more, such as self-employment, debt issues and inaccurate data.