Bridie Robson, Author at Doncastermoneyman

Reasons Why Your Mortgage Application Might Be Declined

Credit Score Mortgage Advice in Doncaster

Failing a credit score for a mortgage

It is an easy task when it comes to a credit score for a mortgage. The only thing that can make it difficult is if you cannot meet the lender’s criteria. The common reason for this is that particular mortgage lenders have a strict set of requirements that need to be met by the applicant. If you have been unable to meet the credit score for the mortgage and the lender is not providing a reason why you have failed, we know it can be frustrating.

A Mortgage Broker in Doncaster can be really beneficial if you are wondering why your application for a mortgage may have been declined. They will have the extensive experience and knowledge you need for your questions to be answered. Here at Doncastermoneyman, we have a team who will take a thorough look at your file and will be able to recommend you the most suitable lender to go with.

A way to improve your credit score is by meeting certain requirements. For example, paying off a credit card balance in full can help with this. Being on the voters roll in your local area can also massively help with improving your credit score. As well as this, getting rid of any bank accounts, store cards and credit cards that you no longer use can be helpful. Overall, having a cleaner record can help.

If you are looking for more ways to improve your credit score, check out our article on ‘how to improve your credit score‘.

Don’t feel defeated if your application is rejected by one lender, there may be a possibility that you will be accepted by another lender. This does require you to have the least amount of credit footprints registered in your name. This should be as clean as possible in the systems and should not have any pending balance in order for the lender to trust you and your credit score easily.

Declined for a mortgage on affordability

Looking for Specialist Mortgage Advice in Doncaster will mean that you need to keep in mind that every mortgage lender has different ways they calculate the amount they can borrow. It is possible to have 10 different approaches from 10 different lenders for the same mortgage application.

If you are self-employed, you might find that one lender will be more lenient with your overtime and bonuses counting towards 100% of your income. On the flip side, you might find some lenders will not look at bonuses as income and some might accept tax credit, maintenance and even child benefit.

When it comes to looking for Specialist Mortgage Advice in Doncaster, there are plenty of benefits. With an expert mortgage broker by your side, you will be able to get the knowledge you need when approaching the lender as well as discussing the chances of your application getting through.

We do suggest that you get Specialist Mortgage Advice in Doncaster before filing an application. Getting the relevant mortgage experts will highly pay off as they will be able to guide you on the right path organise yourself and avoid being disappointed by approaching the wrong lender.

Do you find yourself outside of lending policy?

All lenders work around their rules and emphasise borrowers meeting their lending criteria. You might find that some of the requirements in the criteria are tougher to meet than the others and this is what causes many applications to be declined. Below are some of the reasons why an application may be turned down as it does not reside inside the lending policy.

  • Loan amount not meeting the minimum or maximum limit
  • Mortgage terms do not meet the minimum or maximum age limit
  • Sole mortgage requested by a married applicant
  • Property construction not meeting required standards
  • Insufficient deposit
  • Non-satisfactory credit history
  • Insufficient period of employment or self-employment

A Specialist Mortgage Broker in Doncaster by your side can be best when it comes to selecting the best mortgage plan for you. If you feel you are in any of the situations that have been mentioned above, it’s good to get in touch with a dedicated mortgage advisor to receive help through the process.

Agreement in Principle | Mortgage Advice in Doncaster

What is a Soft Credit Search for a Mortgage?

What is an Agreement in Principle?

There seems to be a rise in awareness of credit scoring from first time buyers and other consumers. This is from the increasing attention credit rating is getting from the general public. Our team has also found that when people get in touch with us, the majority have already viewed their credit reports online.

Experian or Equifax seems to be the two most common credit reference agencies but there are more out there. Check My File is something we do recommend to new clients. When they sign up, they get a 30 day free trial and after the 30 days will then be £14.99 a month, however, this can be canceled anytime. The color-coded report provides an easy-to-follow document that collates a range of information.   

We find that clients have become more aware of the fact that too many credit searches can negatively impact their credit score. Therefore, our clients often ask if our mortgage advisors in Doncaster will do a credit search on them. Even though lenders always carry out credit checks, your dedicated advisor will require the client’s permission before doing any checks.

Banks provide two types of credit searches; hard search or soft search.

What is a Hard credit search?

A hard credit search is when they take an in-depth look at your credit report and any financial institution carrying it out soon as you permit the financial institution to do so. The advantage of a hard credit search would be that the lender is looking into your situation quite carefully and if you pass the credit score, you increase your mortgage application’s chance of success.

As long as you have provided satisfactory documentation to back up the information you have disclosed and you haven’t provided false details, the search can be a success.

The footprint doesn’t state if your application was successful or not, however, if you have carried out a number of searches over a few weeks, this could cause the lenders’ system to decline.

Another benefit is that your credit file will have a record kept stating that you have carried out a hard credit search which is good when someone needs to look at your report. However, a credit file that states that there have been multiple searches carried out in a short period of time isn’t great because it could looks like you have applied for a vast amount of credit at the same time. 

Having the odd hard footprint on your record isn’t bad. That’s why you shouldn’t worry too much about it, it’s just best to be cautious in having too much.

What is a Soft credit search?

Unlike hard searches, a soft credit search provides a ‘lighter’ look at your financial situation. This type of search would normally be used on price comparison websites to provide which options you have or it could be used as a source to verify your identity. You may find some mortgage lenders carry out soft searches and it seems that more lenders are changing to this type of search.

With soft searches, you don’t get offered as much information as you would if someone carried out a hard search. A soft search wouldn’t leave any impact on your credit file if you fail. A lender will obtain less information compared to if they carried out a hard credit search. If you come out with an agreement in principle, the difference between the two doesn’t matter. 

One factor that is helpful is that even though you would be able to see soft searches that got carried out on you, these searches are not visible to other financial institutions like banks. Therefore, you can apply for an agreement in principle without damaging your credit score regardless of if it is successful or not.

In the case where you are wanting to make an offer on a property, our mortgage advisors would suggest having an agreement in principle in place prior to you contact the estate agent. You should give yourself the chance to get the property you want at the lowest possible price. 

A big advantage you can have on your part is if you have demonstrated that you have finances in the right place. Having an agreement in principle can also deter the agent from attempting to ‘cross sell’ their in-house mortgage services to you. 

Gifted Deposit FAQs

What is a Gifted Deposit?

If you are gifted money to cover the portion or full amount of your deposit, this is called a gifted deposit. This can be given to you by a friend or family member, however, there needs to be an agreement that you don’t need to repay the money. 

How can gifted deposits help?

Gifted deposits are helpful if you can afford the monthly payments but not the initial deposit. The chances of getting better rates can be higher if you have been gifted a large amount of the profit.

In circumstances where you can afford the monthly repayments but can’t save for your initial deposit due to being on a lower salary, this can be very beneficial.

Who can gift the deposit?

Usually, your parents, be this birth or adopted, gift a deposit. This method can be referred to as “The Bank of Mum and Dad”.

Alternative family members could be available to gift you a deposit. It’s possible to do this but it does depend on the individual lender. Furthermore, trying to find the right one requires care. 

An equity release in Doncaster can be a way of gifting you a deposit, providing that the family member or friend who is gifting to you is over the age of 55. 

Do your parents know you need help?

The option of their parents being able to help with their mortgage is a concept many clients don’t know about or sometimes they feel like they can’t ask their parents for help.

Usually, many parents are happy to lend a helping hand with their children’s property dreams.

It’s widely believed to be more beneficial for people to take out a mortgage compared to renting. This may be because you would be able to pay less per month.

A lot of the time we find that gifted deposit comes from inheritance, however, parents may gift it earlier in life. In some instances, they may have saved up enough or have released a certain amount of equity from their own property.

Gifted Deposit VS Loans

One thing that lenders don’t always feel is best to do is using a loan in order to pay your deposit. The reason for this is there is the risk that you won’t have enough disposable income to not only the mortgage but the loan at the same time.

Is there a maximum or minimum gifted amount?

The maximum amount of the deposit you want to gift is up to you. Some lenders, require 5% of the deposit to be from your own pocket.

Who can benefit from a gifted deposit?

First time buyers in Doncaster and home movers in Doncaster can benefit from a gifted deposit. Depending on the lender, the Help to Buy Scheme can be useful to have alongside a gifted deposit. This is because the scheme requires a 5% deposit, so paying that via a gifted deposit could be an option. 

What proof is required?

You are required to have a Gifted Deposit form to give to the lender. You might be required to show additional proof & ID (donor ID/bank statements and so on), however, this depends on the lender. 

Doncastermoneyman.com & Doncastermoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is Registered in England, No. 6789312 | Registered Address: 10 Consort Court, Hull, HU9 1PU.

Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk

The information contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK.
Should you have cause to complain and you are not satisfied with our response to your complaint, you may be able to refer it
to the Financial Ombudsman Service, which can be contacted as follows

The Financial Ombudsman Service, Exchange Tower, London, E14 9SR
www.financial-ombudsman.org.uk

© 2022 Doncastermoneyman

Doncastermoneyman, 3 Cavendish Court, South Parade, Doncaster, DN1 2DJ.

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