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In this latest article, ams: explore “Are banks refusing mortgages?” Mortgaging is a process that can save homeowners money by lowering their monthly mortgage payments or changing the terms of their loans. However, in some cases, borrowers find that banks refusing mortgages is a problem. This could be due to numerous factors, such as the borrower’s credit score or debt-to-income ratio.

In some cases, the offer may not be in the borrower’s best interest, and they may be better off seeking a new lender.

Borrowers who are considering mortgaging should carefully weigh all of their options before making a decision. We discuss mortgages refused by high street banks and how you can increase your chances of approval.

What is a high street bank?

In the UK, a high street bank is a term used to describe a traditional bank that is found in the commercial sector of a city. The term is also used as a way to distinguish high street banks from other financial institutions, such as investment banks.

High street banks offer a wide range of services, including current and savings accounts, loans, mortgages, and credit cards. They typically have many physical branches that customers can visit in person, as well as online and mobile banking options.

Barclays, Royal Bank of Scotland, HSBC, and Lloyds are all examples of high street banks. However, like many other banks, high street banks are coming under pressure due to the rising competition of niche banking institutions that tend to offer lower interest rates and more appealing mortgage offers.

Do high street banks offer mortgages?

Whether you’re an individual, a small business or a large-scale company expanding offices or stores around the country, high street banks provide lines of credit, loans, and mortgages.

One thing to note is the development of challenger banks that offer all of their services online, reducing the need for brick-and-mortar stores. In turn, online banks reduce their costs and can therefore reduce their interest rates on mortgages.

Why are high street banks refusing mortgages?

When you apply for a mortgage, high street banks will perform a credit check based on their own set of requirements in order to assess how risky of a customer you are. A credit check will help high street banks determine whether you can afford the property, as well as meet monthly payments along with the higher interest rates.

It’s important to consult a mortgage specialist as every high street bank has its own set of criteria; this is often why a mortgage may be refused by one bank and approved at another.

These are some of the common reasons for banks refusing mortgages:

  • Poor credit history and a low current credit score
  • You’ve made too many credit applications in a short period of time – this creates multiple hard searches
  • Based on your current financial situation, the bank has calculated that you won’t be able to meet monthly payments, this may include having an inadequate deposit
  • You’ve had a CCJ or default in the past six years
  • You are in debt or have a high debt-to-income ratio
  • You are not registered to vote
  • You can’t prove a consistent form of income, or you are self-employed, or you have an unstable employment history
  • There is evidence that you miss payments, or you are late with payments
  • There are errors on your application form
  • You simply cannot afford the property
  • The property is valued at a lower price than the mortgagee expected
  • There are age restrictions or retirement concerns
  • You have no credit history

Does being declined a mortgage affect my credit score?

If you’ve ever applied for a mortgage, you may have been disappointed to learn that your application was declined. But what many people don’t know is that banks refusing mortgages can indirectly hurt your credit score.

Your credit report won’t indicate whether or not mortgages have been approved or not, but it will leave a hard search on your report. Most hard searches stay on your credit report for 12 months and can lower your credit score. High street banks will also view it as a red flag due to your report being searched too often.

Being refused a mortgage by a high street bank, now what?

  1. Find out why your mortgage was declined: This may be tricky, but it is worth investigating with the bank as to why your mortgage was declined. Some banks may not provide this information, and as an alternative, you can have a specialist review your application and credit report to assess the likely reason.

When you contact the team at ams: we will use our years of experience to ascertain which lenders will be the best match for your situation.

  1. Apply with care and precision: Each mortgage application leaves a footprint on your credit report, so it is essential not to make errors on your application. Rather than guessing answers, calculate earnings so that it matches your credit report.
  2. Work on improving your credit score:Improving your credit score takes time. Steps to improve your score could be building a credit file, catching up on missed payments, making payments on time, limiting how often you apply for new credit, and paying off outstanding balances.

Speak to a mortgage specialist today

Are you in the market for a new home? If so, it’s important to consult a mortgage specialist to learn about your options and find the best deal possible and remove the chances of banks refusing mortgages when you apply.

A mortgage specialist can help you understand different types of mortgages, interest rates, and loan terms. They can also help you prequalify for a loan, which can give you an edge when bidding on homes. Don’t wait – consult an ams: mortgage specialist today at 0121 4000 052.