By: Jack Williams

Being declined for a mortgage can be a frustrating and disappointing experience, especially if you have been planning to buy a home for a long time. One of the most common reasons for mortgage decline is affordability. When a lender decides that you cannot afford the mortgage payments, it can be difficult to know what to do next.

The first step is to understand why you were declined. Ask the lender for a written explanation of the reasons for the decline, and request that they provide you with any specific information that you can use to improve your chances of being approved in the future.

One of the main reasons for declining a mortgage application based on affordability is the applicant's income. Additionally, if you are self-employed or have a low credit score, you may be viewed as a higher risk to the lender. You may need to provide additional documentation such as financial statements, tax calculations, and other proof of income. You may also need to work on improving your credit score, by paying off debts and making sure that all credit accounts are paid on time.

Another reason for being declined based on affordability is high debt to income ratio, meaning that your debts are high compared to your income. To improve your chances of being approved for a mortgage, you may need to work on paying off existing debts, such as credit card balances or personal loans.

In case you have been declined due to low deposit or high loan to value, you may have to focus on saving money and increasing the size of your deposit. A larger deposit can help reduce the risk to the lender, making it more likely that your mortgage application will be approved.
 

Steps to take

If you have been declined for a mortgage and don't know what to do next, it's important to act. Here are some steps you can take:

1.    Review your finances: Make sure that you have a clear understanding of your current financial situation and identify any areas where improvements can be made.

2.    Work on improving your credit score: Pay off debts and make sure that all credit accounts are paid on time to improve your credit score.

3.    Build up your savings: Increase the size of your deposit by saving as much as you can.

4.    Look for alternative lenders: Some lenders specialise in working with borrowers who have been declined by traditional banks, look for alternative lenders that may have different underwriting criteria.

5.    Get professional help: as qualified mortgage advisors, we can help you understand your options and guide you through the mortgage application process.
 

We can help

Being declined for a mortgage based on affordability can be a frustrating experience, but it's important not to give up hope. By understanding the reasons for the decline, working on improving your credit score, building up your savings and looking for alternative lenders, you can increase your chances of being approved for a mortgage in the future. We can help you understand your options and advise you on what to do next. Give us a call if you would like some advice.