Further to this, recent research found that just 16% of homeowners have overcome mortgage rejection in the past, highlighting that getting a loan isn’t something to be complacent about, especially during the current economic climate.
In light of this, the team at www.onlinemortgageadvisor.co.uk share their top tips to boost your chances of turning that rejection into an approval.
Resist the temptation to re-apply straight away
While it’s natural to want a quick fix, this is a temptation that you should resist at all costs, since re-applying so soon is never a good idea. If you go it alone and pick another mortgage lender, there are no guarantee things will turn out any differently. So, it’s worth making your next application with a specialist mortgage broker, to help you understand the reasons why you were declined before and take action to prevent them from derailing your plans again.
Think about your credit report
You should download all of your credit reports from the credit reference agencies and attempt to optimise them. This means checking they are fully up to date and requesting that any inaccuracies are removed. Any debts you might have that you’re in a position to clear should also be paid off.
Get the right advice
If you’ve been declined for a mortgage, you don’t want to stick with the same mortgage broker or go it alone again - you need an advisor that has the expertise you need to reclaim control of your mortgage plans, one who has a working relationship with the lenders best positioned to approve you. Getting advice from an expert in overcoming mortgage rejection, who understands the reasons why your original application was declined, will put you in better stead and significantly boost your chances of approval the next time around.
Make yourself attractive to lenders
Potential mortgage lenders need to know you’ll be a responsible borrower, and you can show this by making sure you keep up with your regular payments – paying them in full and on time – which will help to lower your credit utilisation ratio at the same time. On the other hand, if you have no existing credit, sometimes it can be harder to get a mortgage because lenders have little evidence to prove that you’re good at borrowing. Also, if you’ve previously used any ‘buy now, pay later (BNPL) schemes or payday loans, lenders can be cautious as this might suggest someone is living beyond their means, regardless of whether they keep up with the payments or not.
Spread your money further
If your mortgage was declined due to affordability reasons, try spreading your money further where you can – either by increasing the amount you earn monthly or decreasing your living costs. It’s also worth trying to reduce the amount you need to borrow by increasing your deposit. If your deposit is small, around 10% or less, it may mean you’re less likely to be accepted for a mortgage, and even if you are, the rates won’t be as competitive, especially since they’re rising at the fastest rate in a decade. When you have a smaller deposit, your lender will effectively have to put more money towards the property, meaning they might be concerned about you paying this back.
So, make sure you’ve taken your time to save up as much as you can to have a bigger deposit, or at least take advantage of the government schemes currently available, such as Help to Buy, while the cost of living continues to skyrocket.
