Mortgage Declined? Stages of the Mortgage Process

If your mortgage has been declined, you shouldn’t panic. Every lender has a different set of criteria, and could be unsatisfied with certain elements of your application. By using a broker who has access to a wide panel of lenders, you may still be accepted by other lenders. Mortgages can be declined at a number of stages within the process, and with each reason, it is important to talk to one of our expert mortgage advisers for help and advice.

This is usually because you haven’t passed a lender’s credit score check. Whilst your credit score may be good with one agency, a lender may use another, meaning you may not reach the required pass mark. Recent bad credit marks such as a CCJ or IVA can contribute to this, as can a high loan-to-value. Even things such as insufficient address or employment history can contribute to a mortgage being declined at this stage.

Usually what has happened here is either a deeper credit check has picked up something the initial check hadn’t, or the mortgage underwriters declined it because of something not agreeing with their policy, such as not being in your current job for long enough. If this happens, you will need to establish why your mortgage was declined, so talk to the lender and ask them why they declined it. You can then obtain your own credit reports, and cross reference the information to see where you stand.

Once you have an agreement in principle in place, your full mortgage application can then be processed. If it is declined at this stage, it’s because the underwriters weren’t happy with something, whether that be some information left undisclosed in your credit history, or some documents being unacceptable. As previously mentioned, every lender is different, and certain underwriters may deem you as a risk to the lender, yet other will see you as a good risk able to borrow money.

If this happens, it s because something on the valuation report has come up. Either the property has been down-valued, or lenders deem it unsuitable security. This happens when a property is made from an unusual material such as concrete or wood, as it provides a bigger risk to the lender than a traditional property. 

This is uncommon, but can still happen. If it does happen, it’s normally because of some historical adverse credit that wasn’t disclosed initially, such as bankruptcy. 

 For advice on what to do if your mortgage has been declined at any of these stages, speak to one of our expert advisers who will be able to help you with the next steps.