I've been turned down for a mortgage where do I go now?
Many people suffer the frustration of being turned down for a mortgage because of failing a credit check. Applicants can be declined after receiving an agreement in principle from a lender as subsequently something is discovered in the applicant's credit report the lender does not like the look of.
The traditional band of lenders prefer borrowers with hefty deposits, considerable incomes and five star credit scores but not everyone conforms to that ideal profile.
Something which may appear inconsequential such as a single missed utility bill payment could be enough to see a mortgage application rejected by a lender.
There are significant numbers of be borrowers with historic credit issues and this is borne out by survey conducted in 2014 by Moneysupermarket which revealed one in ten people in the UK had been served with a County Court Judgement (CCJ) with as many as 2.2 million missing a rent or mortgage payment in the previous 12 months.
There are lenders reaching out to those who have a credit hiccup
It's all too easy for someone to miss the odd payment and specialist lenders have systems in place designed with these people in mind. They examine each application on its individual merits and where an applicant has demonstrated their financial position has improved a specialist lender will treat these issues as financial problems of the past, not necessarily coming to the conclusion they will be a repeat offender in the future.
Usually several tiers of product are available covering customers who have simply got a low credit score or missed the odd credit card payment right through to those with a considerable adverse credit history and people with recent credit issues.
A credit score is often the primary determinant with a number of lenders, but specialist lenders act a little differently. With them a credit search forms only part of the jigsaw in the lending decision, it serves to inform but is not the definitive criterion as to whether to accept or reject. Ordinarily a score below a certain number would mean failure with the majority of lenders while specialists may look more favourably. Specialist lenders look beyond the credit score and individually examine each application.
Turn to an expert mortgage broker
When it comes to getting a mortgage for a person who has been declined or failed credit scoring, the key is to really understand their circumstances and financial position and determine whether there are any specialist lenders their application could be placed with.
Knowing exactly why a lender has turned you down is not always straightforward. Lenders are not at liberty to disclose why an individual may have failed a credit score and this can make it difficult for brokers to quickly ascertain the reason for a failed application. Data protection laws preclude lenders from divulging anything more than suggestion that brokers should examine their client's credit report.
As expert brokers we know the requirements of each of the lenders including specialist lenders who we can approach. All providers assess cases differently, and we'll ensure your circumstances match the lending criteria. If we think we can help we will say so, if we think your situation is too dire or we feel the mortgage would be unaffordable we will advise you accordingly. In today's heavily regulated mortgage market all applicants not only have to meet strict criteria requirements but they also have to pass affordability and stress tests to prove they can afford, both now and in the future, the mortgages for which they are applying.
By examining your credit report, income and personal situation carefully, we will have more certainty as to whether you fit the requirements of a particular lender and whether an application is likely to accepted.
Popular reasons for being declined a mortgage
Previous financial hiccups
Missed payments on a credit card, personal loan, mortgage or utility bill will count against you.
More significantly, a County Court Judgment (CCJ) issued against you, being declared bankrupt, or entering into an Individual Voluntary Arrangement (IVA) can all destroy your chances of being accepted for a mortgage with a high street lender.
Any past financial transgression, even missing a payment on your mobile phone contract can impact negatively on your credit score and will work against you on a mortgage application.
Insufficient credit history
A failed credit score doesn't always come about because of a missed repayment on a past bill. In many cases people suffer from having a lack of credit history or no credit score, rather than a bad credit score. First time buyers may not have built up enough good credit history or those returning from living abroad for a period of time may have very limited recent borrowing for a lender to assess.
Not registered to vote
Not being on the electoral register at your current address is often problematic. Lenders use the electoral roll to confirm who you are and where you live so it's vital you're listed. If you're not registered you can remedy this easily by doing it online at aboutmyvote.co.uk.
Non standard employment
Being self employed or working as a contractor can be a thorny issue with some lenders. In October 2016 a study by Nottingham Building Society revealed than 1 in 8 self employed borrowers (12%) had been turned down for a mortgage or remortgage despite more than a quarter saying they were earning more than they were previously in the full time jobs.