‘Just when you thought it was safe to get back in the water……..’ You think you have your mortgage ducks in a row but you still get a refusal.
The reasons for many of the current mortgage refusals include the lenders own problems, a perception of your status problems or a property related problem.
Above all you should read the messages and do something about what is hidden in the refusal.
Property related Problem
- The structural survey is for your benefit but the interpretation is often left to the prospective lender. Their interpretation will be risk averse.
- If the property is badly constructed perhaps from dangerous materials or with poor technique such as a wrongly pitched roof the lender may adjust the loan value down aggressively. They are saying BUYER BEWARE so take the hint!
- The lender will know about problems and blights in a tight area such as flooding or subsidence risk and adjust the loan accordingly. Whilst they may be reluctant to tell you why for fear of being sued (what a litigious nation we have become)
- Simple over valuation of a property can derail a mortgage.
- Remember there are other properties and they may be more suitable or less risky for you so don’t shoot the messenger
Lender related Refusals
- You can’t do a lot if the lenders national policy is sent down to a local branch eg we don’t want to lend to people from a particular profession or for a type of property or our loan book is full.
- Lenders who run out of money do not like to admit that fact and try to continue business as usual! Until the crunch and you get knocked back.
- Your face or profile fails their internal IT test.
- Take you business elsewhere. The market is more lively than you may think!
Personal related Refusals
- You may have seen it coming with a poor credit score, low deposit, uncertain income or whatever. Try match your aspirations with the right sort of lender.
- Unexpected refusals should be explained. The explanation will allow you to study and correct the issues for your next attempt to get a loan.
- Outright refusals are unlikely to be reversed on appeal.
- Conditional refusals or approval on terrible terms may be subject to negotiation.
Common Reasons for Refusal
- Overdue or missing your current mortgage repayments.
- Becoming self-employed or changing job during loan negotiations.
- Reducing your credit score.
- Having too many outstanding loans and credit card debts.
- Making errors or omissions on the application forms and documentation.
