Applied for a mortgage and received an offer from a lender? Congratulations! There are just a few more things to consider and put in place before completion.
Or, if your application has been declined, find out what you can do next.
What happens next if your application is approved?
The lender will write to you, your mortgage adviser (if you used one), and your solicitor or conveyancer, with a mortgage offer. This outlines exactly what they’re prepared to lend to you, and if this is subject to any conditions. These will depend on your individual circumstances, but could include paying off a loan or credit card you might have.
It’s not the most happy of topics, and you might have looked into this earlier in the process. But once you’ve got the offer, it’s also good to consider how you would afford your monthly payments if anything went wrong. For example, if you lose your job, or interest rates are much higher at the end of a fixed period. Or you become seriously unwell for a longer period of time, or pass away. If the worst should happen, you may want to consider how you, or your loved ones would deal with the outstanding mortgage.
Check the details
Once you accept the offer, you’re one step away from being committed to the terms and interest rate of the mortgage (which happens when you complete your property purchase). So it doesn’t hurt to double-check that everything is correct and that you’re still happy with the mortgage you’ve picked.
Special conditions
If there are any special conditions attached to your mortgage offer, your solicitor will probably ask you to sign a memorandum of understanding. That’s an agreement between you and your lender confirming that you accept the special conditions.
What you can do next if your application is declined
There are many different reasons as to why an application can be turned down. Here are some of the main areas and what to do for each. It’s also worth talking to the lender if you applied directly, and ask what feedback they can give you. Or you can approach a mortgage broker for help.
Your credit history
You could also ask a mortgage adviser to help you find a lender with less demanding credit history criteria, bear in mind these lenders might charge a higher rate of interest.
To find out more about getting your credit history in shape, take a look at our guides to sorting your finances and improving your credit score.
You’re not registered to vote
Lenders need to be able to confirm who you are and where you live, and so being on the electoral register is key.
Your debt and credit applications
If you have too much debt or have repeatedly made lots of applications for credit, this can count against you. In this instance, it might be best to wait a bit to help improve your credit rating.
During this waiting period, it’s a good idea to avoid taking out any new credit deals. Items will stay on your credit report for around 6 years. Similarly, credit report searches, for example, if you’ve made applications for credit, will stay on your report for around 2 years.
You had a payday loan
Since 2011, any payday loans you’ve taken out will be listed on your credit file – even if you paid them off on time. It doesn’t look good and makes lenders think you can’t cope with having a mortgage.
Your income or the size of your deposit
Even though you’ve been advised what to borrow, sometimes the lender might look at your full application and think your income or deposit doesn’t entitle you to the size of loan you applied for. If this is the case, you could ask the lender what they would be willing to offer.
You could also check whether you qualify for shared ownership or other home-buying schemes.
It’s not you, it’s the lender
Being turned down for a mortgage isn’t always to do with you or your financial situation. Sometimes a lender may have a quota for investing within a certain block of flats, for instance.
Or, sometimes lenders have a preference to lend to specific demographics. If you don’t fit these, you might be rejected. A mortgage adviser will be more familiar with each lender’s lending policy and can advise you on the lender most likely to approve your application.
Please note: Rightmove is not authorised to give financial advice; the information and opinions provided in these articles are not intended to be financial advice and should not be relied upon when making financial decisions. Please seek advice from a regulated mortgage adviser.