One of the most common reasons prospective borrowers are refused a mortgage is simply because the lender’s not a right fit for them. This doesn’t mean homeownership is off the cards - you could just be looking in the wrong place!
Read on to discover some of the most common reasons Leeds Building Society decline mortgage applications, what to do if you receive a rejection, and why working with an independent broker could be the answer to your prayers.
Is Leeds Building Society the right lender for you?Leeds Building Society is one of the largest of its kind in the country, and offers plenty of different mortgage products. It caters to a wide range of customer types, including first-time buyers, retired borrowers and multiple applicants.
While mortgage rates aren’t the cheapest on the market, Leeds’ products are competitive amongst other high street lenders. Maximum borrowing sits at 4.75% your salary, and customers may be eligible to borrow up to 95% loan-to-value (LTV).
That being said, borrowing and LTV caps are in place depending on the type of borrower and how much you want to borrow. Other people who struggle to meet eligibility criteria include newly self-employed applicants, those with poor credit history and guarantor mortgage seekers
5 common reasons Leeds Building Society decline mortgage applicants
There are a range of different reasons borrowers might have a mortgage refused from Leeds Building Society
Sometimes the reasons aren’t obvious, in which case you’re best off asking them directly or seeking advice from a broker. If any of the below apply to you however, this will likely have been a contributing factor
Credit issuesAlthough Leeds has a fairly flexible attitude to prior cases of adverse credit compared to some high street lenders, borrowers who have experienced recent or multiple instances of adverse risk being declined.
Leeds will consider lending to applicants with a maximum of one missed mortgage or secured loan payment in the previous 12 months, and no more than two months arrears on any credit agreement in the last 24 months.
They accept a maximum of one County Court Judgement (CCJ) or default in the last 3 years, which must have been satisfied and be no greater than £500 in value. Unsatisfied CCJs and defaults on the other hand, are not acceptable
Applications from borrowers who have been issued with a bankruptcy order, individual voluntary arrangement (IVA) or previous repossessions will also be declined, unless it occurred over six years ago.
Non-standard construction typesIf you’re looking for a mortgage on an ‘unusual’ (non-standard) construction, the property may be subject to a review by Leed’s Building Society’s referred valuers to determine whether the property provides adequate security for the loan
A few build types are typically liable for rejection; steel framed properties are not usually accepted unless the valuer states that re-saleability isn’t affected, and if the property has a ‘durable outer leaf’ (e.g. brick, block or stone). A Structural Engineer's report would also be required to confirm that the structural frame is free from corrosion and meets satisfactory standards
Pre-fab reinforced concrete properties are not normally acceptable either, unless the valuer states that re-saleability is unlikely to be unaffected and the property has been repaired under a PRC Home Limited approved scheme with a 10 year guarantee
Environmental issuesSometimes, issues brought to light during property surveys can result in lenders refusing mortgage applications. If a surveyor identifies that the property you want to buy has been constructed on or near contaminated land, Leeds Building Society is likely to reject you unless remediation is met by ‘an appropriate party’
If remediation is possible they may request an environmental search, in which case the recommendations made by the environmental specialist, alongside relevant legal and insurance advice, will be reviewed ahead of a decision
Similarly, if Japanese Knotweed is present at the property and the valuer considers it to present a significant risk to the property and / or future saleability, borrowers will receive an automatic rejection.
Not enough self-employment historyTo mitigate the risk posed by the self-employed, many lenders will only accept borrowers who have over 12 months’ worth of accounts
Leeds Building Society has slightly more stringent requirements than some mortgage providers; applicants will only be considered if they have been trading for a minimum of two years. Applications must also be supported by an accountant's certificate or the previous two years’ SA302s and tax year overviews
While ‘prospering’ self-employed businesses are favoured, Leeds will consider applications where profits have reduced, subject to the underwriter being satisfied about the sustainability of income from the business
Guarantor mortgagesIf a parent, other relative or close friend has offered to support your mortgage application by acting as a guarantor, Leeds Building Society isn’t a suitable lender to approach - guarantor mortgages are not accepted in any circumstances.
Other issuesThere are many other reasons Leeds Building Society may reject a mortgage application, and a full list of lending criteria can be found on their website. A few examples of circumstances which may result in a mortgage rejection include:
- Not meeting affordability requirements.
- Having no credit history.
- Multi-applicants that aren’t blood relatives.
- Exceeding the maximum mortgage age of 85
- Having an unspent criminal conviction or pending prosecution.
- Insufficient identity documents.
- Mistakes / discrepancies in applications or supporting evidence.
What to do if Leeds Building Society decline your mortgage applicationIf you’ve had a mortgage application rejected by Leeds Building Society (or any lender for that matter), here are a few best practice steps to put you in good stead next time around.
Resist the urge to reapply straight awayWhile it can be tempting to fire off another application or two to counteract the disappointment of getting a rejection, this is likely to do more harm than good - even if you approach a different lender.
For one, you’re leaving a hard footprint on your credit file every time you apply for finance. Multiple applications in a short space of time can lower your credit score and make you look like a credit-hungry customer, which means lenders are likely to see you as higher risk.
Secondly, the reality is that there’s a reason you’ve been declined, and firing off applications without finding out the reasons could well produce the same result.
Find out why Leeds Building Society refused youSometimes lenders will explain the reasoning behind their decision to refuse mortgage applications, but this isn’t always the case. It’s certainly worth trying to find out so you know what to look out for in future applications.
If you can’t get an answer from Leeds yourself, you can ask a broker to take a look over your application. They may be able to deduce the reasons for the rejection, and provide you with advice going forward.
Address the reasons for the rejectionFinding out why you’ve had a mortgage refused is pretty futile unless you do something about it. The issue may be lender-specific, but it’s just as likely the problem will crop up across the board
One of the most common reasons lenders reject borrowers is because they don’t pass affordability assessments. While every lender works to different criteria, if your outgoings are over a certain level you’re unlikely to get a mortgage from a mainstream lender like Leeds.
If affordability is the issue, consider how you might be able to reduce your outgoings or increase your monthly income. Alternatively, you could ask a broker if they can recommend a specialist lender with less stringent affordability requirements.
Another common reason for being refused a mortgage is adverse credit. If you know or suspect this is the case, download your credit reports to get an understanding of the issue yourself.
There’s no quick fix for a damaged credit file, but you may be able to start some repair work; ensure all your outgoings are paid on time in full, try to lower your credit utilisation each month, and clear as much outstanding debt as you can.
How a broker can help salvage a rejected mortgage applicationIf you’ve had a mortgage refused by Leeds Building Society, it’s important not to lose faith. The good news is that there are an abundance of other lenders out there, and our team of expert advisors are ready and waiting to help you find the perfect one!
We have access to over 100 mortgage providers, from high street banks and building societies to niche lenders, including specialists in bad credit and self-employed mortgages. The best news? We have an impressive ability of securing competitive mortgages for customers who have previously been turned away by lenders or other brokers.
What are you waiting for? Tell us a bit more about yourself and your circumstances via our simple online enquiry form, or pick up the phone and call us directly on 023 8098 0304.