1. Check your credit report
Problems on your file can trigger an automatic rejection.
The report will pinpoint any issues impacting you personally. These could be:
- Adverse credit score
- If you have too much debt already
- Long-forgotten cards or loan facilities you've never cancelled
- Mistakes
- Potential ID fraud
- False links to family or former partners with poor records
2. Control your spending
Lenders no longer offer simple multiples of salary.
Instead they calculate how big a loan you can afford once all your other bills are paid - and they check your bank statements.
If you've been over your agreed overdraft limit a lot lately, it's worth postponing an application until you've had at least six clean months.
3. Be realistic about property values
Before you start looking for a property, try and do some online research to find out what similar properties have sold for in the area you are buying. It's always best to do your sums before you put in an offer.
4. Have you provided the right information?
Simple mistakes such as listing your wage and overtime payments in the wrong boxes can trigger rejections.
5. Be aware of non-refundable application fees
- Mortgage applications are usually subject to admin fees
- Your fee may not be refunded if your application fails
Steps you can take to help improve the chances of your lending application being approved first time
There are a number of steps you can take to help improve your chances of being accepted for a mortgage the first time you apply. The list below highlights some of the key reasons why you may be declined and offers a few suggestions for countering them.
1. You are a first time buyer with no or limited credit history
Try to live within your means, as this will help you control your spending and help improve your chances of retaining a good credit status.
Don't build up too much debt on your credit cards, and ensure you pay them off in full each month to show you can manage debt.
Pay your rent, utility, telephone, and any other bills on time.
Lenders often ask for three months' bank statements, so it's important to consider how your spending behaviour may be viewed by a lender.
2. You don't have a large enough deposit
You could use TSB's online Money Planner, arrange a full financial review with us, or use an online comparison site. These will all help you review your spending/saving and identify ways to save money in order to build up a larger deposit.
Look at lower value properties.
Consider buying on a shared equity basis with a lower deposit. Local Authorities, developers or Housing Associations may be able to help. Speak to us in the first instance so we may understand your requirements.
3. You need to remortgage but your circumstances have changed since you last took out a mortgage
Understand how much equity you have in your home before applying.
Consider how much you can afford before applying and be clear on the following:
- Your personal circumstances/finances
- Your levels of unsecured debt (if any)
- The type of mortgage you need
If you have an interest only mortgage, do you have a repayment vehicle in place lenders will accept? Inheritance isn't likely to be an option lenders will allow.
4. You have a poor credit history
Some lenders may consider you after a year of re-establishing a good payment record, but you may pay a higher interest rate than other borrowers.
If you are in this situation, speak to an Independent Financial Advisor as some specialist lenders may be able to help you.
5. You are self-employed
Lenders will generally want to see the last three years' financial statements and proof of income.
If your financial statements are up to date, a lender is more likely to consider it.
6. You have been made redundant
If you have been made redundant recently and then became self-employed, your application is more likely to succeed if you are in the same type of work that you did as an employee.
If you have been made redundant and you wish to apply for a new mortgage, a lender will need to be confident you have other means of repaying your mortgage before granting you one. They will look for assets, savings and what the redundancy package was.
