One in six mortgage holders has been rejected for a mortgage in the past, according to new research from Which? Mortgage Advisers.
The research shows that one in six (16%) mortgage holders surveyed has been rejected for a mortgage and that the most likely areas for mortgage rejections were London (29%) and the West Midlands (22%).
Younger people were much more likely to be rejected for a mortgage, with four in 10 (41%) 18 to 24-year-old homeowners having experienced a mortgage rejection before buying their current home. The proportion of homeowners that we surveyed who had experienced failed applications dropped to 15 per cent for 35 to 44-year-olds and was just 8 per cent for those aged 45 to 50.
Which? Mortgage Advisers is warning that a mortgage rejection could lead to lengthy delays in the home-buying process. The survey found that, of those rejected for a mortgage, over half (54%) took more than three months to be accepted for another mortgage. In addition to being frustrating, this sort of delay could also cause problems for the rest of the chain, potentially putting your property purchase at risk of falling through.
Being rejected by one mortgage lender can make it harder to get accepted by another – so it’s important to only apply for a mortgage if you’re fairly confident of being accepted. When you have an application rejected with one lender, any new lender you apply to will ask the reason for this.
David Blake, Principal Mortgage Adviser, Which? Mortgage Advisers, said:
“While a mortgage rejection isn’t the end of the road when buying a home, it can clearly have a detrimental impact on the rest of your home-buying experience.
“Ensure you have all the documents and relevant information you need before submitting your mortgage application and don’t over-stretch your finances by applying for a loan that you won’t be able to afford.”
For advice on your mortgage options, visit http://mortgageadvisers.which.co.uk
Tips from Which? Mortgage Advisers when applying for a mortgage:
- Mortgage applications can be rejected for a whole host of reasons, including poor credit score, property valuation and not being able to provide suitable documents.
- Consider applying for a mortgage agreement ‘in principle’ when you’re at the house-hunting stage. This confirms that a lender is theoretically willing to lend you a certain amount, so it will give you an accurate idea of your budget and also prove to sellers and estate agents that you’re a serious buyer.
- Find out exactly what information the lender requires when applying for a mortgage.
- Don’t apply for a mortgage that you can’t afford. Generally speaking, if you have a good credit history you’ll be able to borrow four to five times your annual salary.
- An independent mortgage adviser should be able to advise you on which lender you’d have the best chance of being approved for a loan with.
- The lender offering the cheapest rates won’t always be right for you. A broker should be able to advise on the best lender and deal for your personal situation.
Notes to editors
- Which? Mortgage Advisers surveyed over 3,500 homeowners with mortgages in June 2018 about their mortgage experiences.
- Which? Mortgage Advisers is one of the Which? commercial services. When an important market fails to deliver value for customers, we develop products and services that put customers’ needs first. Which? Mortgage Advisers provides truly independent, whole-of-market mortgage advice. You can find out more by visiting https://mortgageadvisers.which.co.uk.
- Your home may be repossessed if you do not keep up repayments on your mortgage.