Banks tend to be overly pessimistic. They often anticipate the worst outcome when dealing with their customers!
Banks, therefore, take all the necessary measures to safeguard themselves from financial losses, and if repayment of the loan is in doubt, they may deny the application request.
If you have fulfilled the essential requirements, for example:
- Only wanting to borrow as much as the bank is prepared to lend according to your income
- You have enough deposit money for the mortgage application
Listed below are several reasons leading to a mortgage application declined scenario, such as:
- An inability to demonstrate your income or having a pattern of inconsistent income
- There are mistakes in your application, such as incorrect or mismatched information
- Self-employment can create risks for lenders
- You are employed on a short-term contract, variable hours contract, or maybe even a zero-hour contract
- You are tied to various financial commitments
- You are a foreign national without citizenship or indefinite leave to remain
- There is no record of you on the electoral register
- You have applied for the wrong type of mortgage
- There have been recent instances of missed or late payments
You may also have a mortgage declined if your credit score shows that you have:
- Experienced a bankruptcy
- Have a county court judgement (CCJ) or default against you
- Had loans or applications for credit and credit cards rejected
- Had a high number of credit checks
- Missed or made payments late
These situations may cause a bank to lose confidence that you will be able to make the monthly repayments. Remember that the bank aims to make a profit, so they will shy away from most things that will put them at risk.