Applications
Get Declined? Common Mistakes and How To Fix Them
Whether you’re a first-time-buyer or home mover, navigating mortgages can feel tricky. Before starting your journey to property-ownership, it’s important to understand how mortgage applications work, the possible pitfalls, and how to demonstrate your financial circumstances to lenders effectively, to receive the best outcome.
In this guide, the team at Diamond Property Finance will explore common reasons why mortgage applications get declined in the UK. It will also give you practical tips to improve your eligibility and affordability.
Understanding Mortgage Declines in the UK
In the active UK housing market, getting a mortgage is crucial for many people who want to buy homes. The process can be complex, as lenders carefully review applications to check if a borrower’s finances are sound, often requiring the assistance of solicitors. This complete review looks at many parts of your financial history. It includes your credit score, how steady your income is, any debts you already have, and even how you spend your money.
The Impact of Your Credit Score & Income Verification
Your credit score is of paramount importance to lenders when you apply for a mortgage...
Top Reasons for Mortgage Application Rejections
Facing a mortgage decline can be disheartening but it’s not necessarily the end of the road...
Inadequate Income or Debt-to-Income Ratio
One common reason clients receive a mortgage decline is when they don’t have enough income to cover the loan amount they request...
Issues with Property Valuation and Type
The property you want to mortgage is checked during the application process...
Navigating Financial History Challenges
Past money problems do not have to keep you from getting a mortgage...
Overcoming Past Financial Missteps
A blotted credit history can worry lenders however, it doesn’t always mean they will decline your application...
Addressing Frequent Job Changes or Gaps in Employment
Employment history is important for lenders because it shows them how stable your income is...
Strategies to Enhance Your Mortgage Application
A strong mortgage application includes important details that provides an overall picture of how good your financial profile is...
Improving Your Credit Score
As your credit score is very important when securing a mortgage, there are steps you can take to improve your credit score over time. • Register on the Electoral Roll • Manage Existing Debts • Reduce Credit Utilisation • Check for Errors
Preparing Your Documentation Thoroughly
Correct and meticulous documentation is critical for a smooth mortgage application. Lenders will require that you provide a comprehensive collection of documentation proving your financial situation.
Document
Proof of Identity
Proof of Address
Proof of Income
Bank Statements
Existing Credit Commitments
How to avoid a mortgage decline
Description
Passport, driver’s license, or national identity card
Recent utility bills, bank statements, or council tax bills
Last three months’ payslips, tax returns, or benefit statements
Last three to six months’ statements showing income and expenditure
Statements for credit cards, loans, overdrafts, or other obligations
As a mortgage applicant, knowing why mortgage applications get rejected can help you overcome pitfalls ahead of going through the process. Key takeaways to consider ahead of applying:
• Lenders will look at your credit score, income, debt, and financial history. • Common reasons for rejection: low income, high debt-to-income ratio, poor credit history, and property issues. • Boost approval chances by fixing credit issues, organising documents, and keeping finances healthy. • If declined, improve your finances and try again. • Unsure where to start? Diamond Property Finance’s team is here to help with advice and support.