How Long to Wait After Mortgage Declined to Reapply?
Reapplying immediately to a declined mortgage application is rarely a good move, partly because you should have a thorough understanding of the reason for the declined mortgage before you apply again. An alternative lender may be a much better match, so after having a mortgage application declined, it is important to assess your options.
Choosing a new lender with comparable lending policies will inevitably mean you have a declined mortgage application and could negatively affect your credit report if you accumulate multiple hard searches.
Why Would a Mortgage Application Be Declined?
There are thousands of reasons a lender might use their mortgage decline letter sample to reject your application. In some scenarios, they simply aren't offering the product any longer so will automatically issue a declined mortgage application.
Credit is one of the most common issues in a declined mortgage application, so we recommend you review your credit scoring and history before applying. Can underwriters decline mortgage applicants even for minor credit issues?
They can indeed, so if you have even small issues, such as a late payment a couple of years ago, this will influence your choice of lender and may result in a declined mortgage application. It is always wise to consult an independent broker to ensure you don't have a further mortgage application declined.
Independent Advice After Being Declined Mortgage Lending
Our recommendation is always to contact Revolution Finance Brokers to discuss the reason for your declined mortgage, the possible options, and how to ensure you significantly reduce the prospects of having a declined mortgage application again.
It may be a case of switching to a different lender if your mortgage declined by underwriter is likely to be a similar response from another mainstream provider. However, knowing the reasons for your declined mortgage application is essential.
How Often Are Mortgages Declined, and What Is the Most Common Reason for Being Declined Mortgage Approval?
The most typical reason people have a mortgage application declined is that their requirements, circumstances, income, or assessed risk are incompatible with the lender they have chosen.
You could have a declined mortgage application because of poor advice, relying on a regular bank, or a lack of awareness of lender policies that mean they are very likely to decline mortgage offer.
High street banks do offer mortgage products, but they have very strict lending criteria, so a declined mortgage application is more common. How often are mortgages declined? Probably far more often than you might expect!
Why Would a Mortgage Application Be Declined By a Bank?
Next, we’ll run through some of the most frequent reasons for a bank to decline mortgage offer – although this isn’t an exhaustive list, and your lender could have a different reason altogether for your declined mortgage application!
Declined Mortgage Application Due to Affordability
If your income isn’t sufficient to meet the lender’s affordability assessments, you will have a declined mortgage application. Lenders tend to use multiples of your annual income to decide on the maximum to lend, but if your mortgage get declined due to affordability, it may also be because of your income structure.
For example, people who earn a proportion of their income through commissions, bonuses or self-employment may be more likely to have a mortgage declined by underwriter if the lender’s policies exclude non-standard earnings. Other lenders will issue a declined mortgage application because they exclude specific types of income.
Declined Mortgage Because of Bad Credit
Applicants with bad credit or a low credit score are often declined mortgage borrowing immediately by mainstream lenders who have exceptionally low-risk tolerances. Other lenders might not decline mortgage offer applicants outright but will have caveats and conditions that could result in a declined mortgage application.
Adverse credit is far from unusual, but you need a lender with appropriate policies to ensure you don’t have a declined mortgage application based on your credit history.
Having a Mortgage Application Declined Because of an Insufficient Deposit
Most lenders will decline mortgage offer applications if the deposit is less than 10%. Some lenders have much higher minimum deposit requirements, so you could have been declined a mortgage on this basis alone – increasing your deposit could be a way to avoid a declined mortgage application.
Mortgage Declined By Underwriter Due to Debt
Almost everybody has some level of debt, including overdrafts, credit cards or finance agreements. However, overdraft usage can lead to being declined mortgage borrowing because the lender perceives that your finances aren’t under control. High debt to income ratios commonly contribute to a declined mortgage application.
While overdrafts don’t automatically mean you will be declined mortgage borrowing, any ongoing reliance on short-term debt can make it harder to secure a mortgage or mean lenders will notify you of a declined mortgage application.
How Often Are Mortgages Declined Due to Gambling Income?
Gambling carries negative connotations within the lending sector making a declined mortgage application more likely. Some providers will refuse to lend to anybody with gambling income – you could even have a decline mortgage offer because of occasional gambling as a hobby.
Applicants can also have a mortgage declined by underwriter after an initial agreement in principle if the lender concludes that a proportion of their income derives from gambling. Gambling income is often excluded from affordability assessments and may lead to a declined mortgage application.
Having a Declined Mortgage After Exchange
If you have been declined a mortgage after exchanging contracts, it can be very stressful, particularly if you are part of a chain and dependent on your mortgage borrowing to complete the transaction. A declined mortgage application could make it impossible to move forward.
Fortunately, an independent broker can help you appeal the decision or determine the right way to offset the lender’s concerns following a declined mortgage application to ensure you aren’t declined mortgage borrowing altogether.
What to Do If Your Mortgage Get Declined After Agreement in Principle
Agreements or decisions in principle (AIP or DIP) are tentative and a withdrawal is different from a declined mortgage application. They are not a sure-fire indication that you won't be declined mortgage borrowing once the underwriter conducts more thorough checks and calculations.
Most borrowers have a declined mortgage application at the AIP stage, and it is less common to have been declined a mortgage after the original offer – although far from unheard of.
Receiving a Declined Mortgage Notice After Valuation
Property valuations are an important part of the mortgage process and can contribute to a declined mortgage application. A lender could decline mortgage offer applicants at any point if the valuation shows that the property is worth less than they intend to pay.
You can also have mortgage declined by underwriter if the building has structural issues, defects, a lower-than-expected market value, or is made from non-standard materials such as a timber frame.
These common reasons for being declined mortgage borrowing demonstrate the vast range of circumstances that can end up having a mortgage application declined. There are multiple other scenarios where being declined mortgage lending is possible.
Why Would a Mortgage Application Be Declined for Any Other Reason?
Every lender has a range of rules, policies, calculation methods, and conditions they apply, and you could have a mortgage application declined for any reason that your finances, income, or intended property fall outside of the terms the lender is comfortable with.
We strongly recommend contacting Revolution Finance Brokers if you have had a mortgage application declined to work through the justifications and decide whether to amend your application or look for a more suitable lender.
