Finding a mortgage after a lender rejection
What do you do if you have been rejected for a mortgage? You may feel like either giving up or rushing straight out and trying your luck with another bank or building society. Being declined for a home loan isn't necessarily the end of the world and there are lots of things you can do to find a mortgage after you've been rejected by a lender.
Our guide explains what to do next.
Establish why your application was rejected
There are a number of reasons why a lender may have rejected your application. Many of them will be down to specific rules for one particular bank or building society and just because you don't meet their criteria it doesn't mean you won't get a mortgage with someone else.
Common reasons your application may be rejected include:
- Your application did not meet a lender's criteria - perhaps a lender needs you to have been self-employed for three years when you have only worked for yourself for two years
- Poor credit history - you may have defaults or CCJs
- You are not on the voter's roll
- Affordability issues - using their own specific criteria a lender may determine that you can't afford the mortgage that you need
- A simple mistake - many lenders use automated underwriting and so if a piece of information has been input incorrectly it could adversely affect the decision
Not all rejections mean you won't get a mortgage
Criteria differs hugely from one lender to another. What this means is that just because you have been declined for a loan with one lender doesn't mean you won't find another bank or building society that is happy to lend.
Some banks will simply have a list of underwriting requirements you don't meet. They may take more items into account when calculating your outgoings or require a bigger deposit than you have available. With many lenders using 'tick-box' underwriting, it's easy to fall outside their criteria.
Other lenders may look differently on your application, however. Don't give up.
Some problems are more serious
There are reasons for having your mortgage rejected that may cause you more problems.
For example, if you are declined because of poor credit you should obtain a copy of your credit file. If you have missed payments on another mortgage, loans or credit cards then it may be more difficult to source the mortgage you need through a High Street lender. Read our guide to getting a mortgage after a County Court Judgement.
Not being on the voter's roll can also adversely affect your application. Make sure you are registered to vote with your local council.
Since lenders were forced to implement additional affordability checks, it has been harder for many people to get the mortgage they need based on their income and outgoings. If you are rejected because a lender doesn't believe you can afford the loan then paying off debts or increasing your income may help.
A mortgage broker can help you
A qualified, independent mortgage broker deals with a wide number of lenders. They will often know which lenders are likely to be more sympathetic to your circumstances and which banks and building societies will lend to someone in your situation. They will also talk to an underwriter on your behalf.
Speaking to a mortgage broker in the first instance can save you time and money. Rather than spending time applying with the wrong lender and being rejected, they can help you to find the right lender first time.