Why Has My Mortgage Application Been Declined?

It is very common these days for people with a perfectly good credit history to be refused a mortgage. This is due in part to some lenders over tightening lending criteria. You are unlikely to find this out until you have applied and been refused a mortgage. If you get refused then your credit rating can be affected and could make it harder to secure a mortgage with another lender.

HSBC is appears to be one of the worst offenders, we're hearing reports that 81% of mortgage applicants to HSBC are being a turned away. RBS and Abbey have also tightened their lending criteria to the extent that applications that would have been perfectly good a year ago are now being flatly refused without good reason.

Why is this? There is a limited supply of money available for mortgages and some lenders are still very nervous about lending to anyone with the slightest blemish on their credit file. To reduce risk lenders are being very choosey as to whom they will lend to. They are cherry picking those people with the greatest equity in their property - typically, 40% or more. Frequently they require salaries much greater than they would have accepted in 2008. Applicants with moderate credit facilities are considered risky.

With falling house prices and unemployment posing a risk to affordability it's understandable why some lenders are doing this but their over cautious approach could make it harder for you to secure credit. Advice has never been more important.

The good news is that not all lenders have taken this approach and you should not be too despondent if you have been refused - provided your credit history is good there will be a lender with good mortgage deals available to you.

Everyone's circumstances are different and need to be assessed individually if a refusal is to be avoided. Contact us for an appraisal of your "mortgageability" and avoid the risk of a stain on your credit file.