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Are you wondering why would a mortgage be declined? Securing a mortgage is an important step in achieving homeownership, but there are various reasons why a mortgage could be declined.

You have decided that it’s time to get on the property ladder, thought about the type of property you want, and maybe even started looking through the offerings on estate agents’ websites.

Throughout, the cost implications will be on your mind, and you will no doubt feel dismayed and bewildered if your mortgage application gets declined. Don’t panic – not all banks are created equal.

Answering why would a mortgage be declined

Bear in mind that the criteria for the acceptance of an application differ from one to another, so do not assume that it is the end of the story if you have been declined once.

Reasons for why a mortgage is declined will vary. Your next step will be to work out why would a mortgage be declined (as this may not be revealed), so that you can approach the right mortgage lender or consider your circumstances to see what can be changed.

From the start, it is important to recognise that banks tend to catastrophise in that they assume the worst – at least when it comes to their customers! Accordingly, they do all they can to protect themselves from losing money.

Why do underwriters decline mortgages?

We are often asked, “Why do underwriters decline mortgages.” The fact is mortgage underwriters decline loan applications when they assess the risk involved to be too high. They conduct a thorough evaluation of factors such as the borrower's income, credit history, debt-to-income ratio, and collateral value.

If any of these factors do not meet the lender's specific criteria or raise doubts about the borrower's ability to repay the loan, the underwriter may decline the mortgage. The primary objective of the underwriter is to safeguard the lender's interests by ensuring that the borrower is financially capable of meeting their mortgage obligations.

Reasons why mortgages are declined

Assuming that you have met the basic criteria, such as only wanting to borrow as much as the bank is prepared to lend according to your income and you have a sufficient deposit, there are a number of other issues to consider. Here are just some of the reasons why mortgages are declined:

1)    Irregular income

For example, if you are unable to prove your income or your earnings fluctuate, such as if you are self-employed, a temporary worker or on a zero hour contract, a bank will not be confident that you will be able to make the repayments every month.

2)    Excessive financial commitments

Similarly, those people who already have a significant number of financial commitments can be declined as the bank will assume that a mortgage will be too much, which can result in it not being paid.

3)    Problems with credit checks

If you have previously been declared bankrupt or have any other nasties hidden in your credit history, such as CCJs (county court judgements), loan, or credit card application rejections or even too many credit checks, you can expect to have a mortgage application declined. A bank may assume that problems will follow you and though they can sometimes be satisfied with insurance, such as an Insolvency Act policy, they may just decline to offer a mortgage at all.

4)    Foreign nationals

A foreign national without citizenship/indefinite leave to remain or someone who has not lived in the UK for at least three years may find it difficult to get a mortgage. Banks are not only concerned about not being able to find out enough about your history but also about the risk of you fleeing the country and not paying the mortgage.

5)    Living “off the grid”

Similarly, if you have successfully lived ‘off the grid’ to the point where you’re not on the electoral register, a bank is likely to walk away. If they are unable to verify certain details about your background, they will not lend.

Remember that a bank aims to make a profit, so they will shy away from most things that will put this at risk.

Looking for expert mortgage advice?

Contact us at 0121 4000 052 or visit our website to learn more about why mortgages can be declined and why do underwriters decline mortgages. Our team at ams: is here to guide you through the mortgage application process and help you understand the factors that may affect your mortgage approval. Do not let uncertainties hold you back – reach out to us today for personalised assistance.