Six reasons your mortgage application might get rejected

Written by: Your Money
The experts at outline some of the common red flags that may put mortgage lenders off...

You have a poor credit history

A bad credit history means potential lenders will worry about your ability to manage your debts and pay back your mortgage on time. Even if you have no credit rating at all, it can be harder to get a mortgage as lenders have no evidence to prove that you’re good at paying your debts off.

You don’t earn enough

Affordability is one of the biggest factors that a lender will take into consideration when deciding whether to lend to you. On average, mortgage lenders will offer home loans based on 4.5 times your salary, so, ensure that the amount you’re asking for is reasonably in line with the amount of money you have coming in each month before submitting the application.

You’ve used ‘buy now, pay later’ schemes

Buy now, pay later schemes such as Klarna and Clear Pay are a relatively new phenomenon, and mortgage lenders don’t particularly like them. Lenders are cautious when seeing Klarna on statements as it may suggest someone is living beyond their means, even if they do make their payments on time.

You only have a small deposit

If your deposit is very small, around 10% or less, it may mean you’re less likely to be accepted for a mortgage, and if you are, the rates won’t be fantastic. When you have a small deposit, your lender will have to put more towards the property meaning they could be concerned about you repaying this back. Ensure that you’ve taken your time to save up as much as you can to have a bigger deposit.

You’ve taken out a payday loan

Even if you pay them on time, payday loans are listed on your credit file for six years, and some lenders may think that a payday loan means you’ll struggle to manage your money and therefore pay back the mortgage. Make sure that the loan is paid off in full before you apply for a mortgage and speak to a broker to see which providers will be willing to offer you the money you’re asking for.

You’re not registered to vote

Mortgage lenders will use the electoral roll to make sure that you are who you say you are. Registering to vote boosts your credit score and increases your chances of getting a mortgage. Additionally, the longer you stay at one address, the better, as it will show the lender that you have stability.

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