Mortgage rejection: how to stop it happening again
Whether you’re a first-time buyer, second-stepper or someone who’s looking to downsize, getting the right mortgage is crucial.
But for those with a not-so-perfect credit score, this may be tricky, particularly for applicants who, as a result of their adverse credit rating, have been denied high-street lending.
When this happens, over half of consumers say they are too uncomfortable to apply for a mortgage again, according to Bluestone Mortgages’ recent Specialist Lending Tracker.
It also revealed two in 10 consumers who had been denied lending in the past believed they had no alternative options which would allow them to secure a mortgage.
However, being rejected from one lender doesn’t mean an automatic decline from all. So, what steps can you take to boost your chances of securing a mortgage in the future?
Review your financial situation
A good place to start is to find out why you have been refused a mortgage. Was it that credit card you couldn’t pay off, or missed repayments on a loan?
The lending criteria in place at high street banks typically don’t cater for customers who haven’t got a solid history of borrowing and repaying loans under their belts.
Anything but a near ‘perfect’ credit score can be rejected – especially for those headline rates. Taking steps to ensure you’re paying off any existing debt, for example, or setting up direct debits to regularly pay your monthly bills will reduce your reliance on credit and prove to lenders you are capable of managing your finances effectively.
Seek guidance from an adviser
An alternative route is to seek professional financial advice. Where you may feel left in the dark by high-street lenders, advisers can give insight as to why your last mortgage application was denied and guide you to the best option for your specific needs.
Brokers will be able to evaluate your individual circumstances and determine a viable and sensible lending solution which takes into account your financial situation.
Brokers also often have access to specialist products which are not available elsewhere – offering solutions which may be a better fit for your circumstances than those on the high-street.
Look beyond the high street
High street banks aren’t the only way to secure a mortgage. There is a wealth of alternative options for borrowers whose scenario might be classed as ‘complex’. Those who are self-employed, had a credit blip or have complex income streams or an unusual property should not discount their chances of achieving a mortgage.
Specialist lenders are experienced and keen to lend to those who may not fit the tick-box mentality of the high street banks and building societies.
Employing a more flexible approach to their lending criteria, specialist lenders don’t use automated mortgage application systems. Rather they manually underwrite each application to cater for the individual’s personal and financial situation.
Even if you have been rejected for high street lending, there is a very good chance a specialist lender can give you the solution you need.
Just because you may have a history of bad credit, it does not mean you can’t secure a mortgage.
Steve Seal is managing director at Bluestone Mortgages