Before you can get your foot on the property ladder, you need to go through the mortgage application process. This is when the banks will look at your financial position in more detail in order to determine whether they deem you responsible enough to be lent the money for your dream home.

It’s not just about how much money you have in your bank account, though, as there are a few different reasons why mortgage applications may get rejected. Here, we highlight them and explain how you could avoid becoming the next victim. 

Doing it yourself

The truth is, mortgage applications are very detailed and choosing which mortgage lender to apply for is a minefield. For this reason, it pays to use a professional. Not only will they be able to advise whether they think you’ll be accepted but they will also know which lender is more likely to approve your application. Many of them even have handy tools like Trussle’s mortgage calculator, which can help you to get your finances in check before even starting the process.  

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Late payments

Car finance, credit cards, even your rent – if you default payments or are regularly late to pay, this information will sit on your credit report, which is used by lenders to determine how financially responsible you are. If you know that you’ll be applying for a mortgage in the near future, it’s wise to try and pay off any debts and ensure that you don’t defer any further payments. Don’t worry if you do have monthly payments going out though – as long as you pay on time, Money Saving Expert says that your credit rating and report won’t be affected. 

Too many applications

Money Helper explains that another piece of information that sits on your credit report is related to how many times you’ve applied for credit – this includes applications for credit cards, mobile phones, loans, and any other finance deals. In short, if your report shows that you’ve been applying for quite a few of these things in a short space of time, it suggests that you’re in need of borrowing money. Usually, this type of data is wiped after 12 months though so again, if you are considering buying a new home, it might be wise to hold off on any new contracts until you’ve received a mortgage in principle.

Not being registered to vote

Few people realize that being registered to vote can actually boost your chances of getting a mortgage. The other mistake that many people make when it comes to voting is automatically thinking they’re registered. It only takes minutes to do and could be the difference between getting on the property ladder and not. 

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These are just some of the reasons why your mortgage application may be rejected. The truth is, every application is treated differently and only your mortgage broker and lender will be able to say whether you’ll be approved. If your application isn’t successful though, don’t worry. There are plenty of ways to enhance your chances for the next time around.

This article appears in Jan 1 – Dec 31, 2022.