Getting a mortgage is a huge financial responsibility and lenders don’t tend to hand it out to just anyone anymore and several applications are turned down on a daily basis.
If you are about to apply for a mortgage and are afraid that you might not get approved, let’s take a look at the top 7 reasons you should be wary of.
#1 – You’re not earning enough
This is one of the most basic reasons why your mortgage will get rejected. Lenders want to make sure that you earn enough to pay them back. So, unless your income is enough to pay installments and interest, don’t even think of trying. In case you’re lucky, they might accept your mortgage for a little less than what you need – but a good source of steady income is mandatory.
#2 – There’s already too much debt on your shoulders
If your debt history is not in the right kind of balance lenders won’t be willing to approve your mortgage. How can someone trust you with a history where your debts have been mounting and you haven’t done much to pay them off? So, in case you have any credit cards that you don’t use, it’s advised that you close them altogether.
#3 – You’ve seen extreme financial conditions in the past
Bad credit means bad history, and it generally sticks with you for at least 6 years (though there are certain missed payments which only stay in your files for as long as 3 years). But if you have been issued a bankruptcy order, it will remain in your file for 6 years and will have a major impact on lenders’ final decision.
#4 – You’re getting the ‘wrong’ kind of income
Lenders simply want to make sure that you have a consistent and steady income. Therefore, being self-employed isn’t the perfect of scenarios for a mortgage approval. It doesn’t matter how much money you make from different sources, the lender is not expected to approve your application if you are working on a commission-based structure. You will be requested to show them at least 2 years of history where you have been profitable.
#5 – Too many credit searches
If you have been roaming around getting too many quotes for a mortgage, there is a possibility that you might get into trouble. Most lenders run a credit check on you and once they find out you have been trying to find a mortgage through different channels, it is going to adversely affect your credit score. Look for different deals, choose one that suits you best and apply for it.
#6 – Not being on the electoral roll
You need to get on the electoral roll if you’re not already on it. It shows stability and makes your application more credible and trust worthy. You’ll have a better chance if you’ve stayed in one house for a long period of time.
#7 – You have absolutely no credit history
While you have read above that having a poor credit history can negatively affect your chances, not having a credit history at all can be troublesome as well. Lenders need your credit history to check whether you are good at paying back or not.