Lenders take into account a variety of factors before approving your mortgage. Their criteria will establish whether you qualify for a loan and the maximum amount they can lend you. Obtaining a loan can be easy if you follow the right steps. You may use all your energy and resources and your application may still be declined. This unfortunate outcome may be as a valuable learning experience. A rejection allows you to recognise your mistakes and work on improvements
You have a poor credit history and report. Lenders look at your credit history to determine whether you qualify for a loan, and how much they are willing to offer. They look for your minimal score and derogatory reports. If you have a really bad report, it may be the reason you lost your mortgage. If you recently took a new credit or a loan prior to the application of the mortgage, lenders will not approve your request. Your salary may be unable to cater for all the commitments at one go therefore lenders decline your loan to prevent future paying troubles.
You may have changed your job status prior to the application of the loan. Most lenders give out loans to people who have been working at the same job for at least one year. Changing your employment can be a deal breaker. Lenders need assurance of a permanent job that will provide consistent income which you will use to pay the monthly mortgage debt.
A lender can be able to tell if you can pay a loan by looking at your income and comparing it with the sum of all your existing debt. If you can’t provide sufficient information about your income, lenders will likely deny your request for a loan. If you are unemployed, you have a zero% chance of getting a mortgage. Lenders need you to prove your source of income in order to give you a mortgage.
Inadequate down payment will make you lenders decline your mortgage application. Down payment is an investment in the house you are planning to buy. Lenders require a down payment as low as 5% of the total value of the home you are willing to purchase. If you are looking to borrow 100% of the price of your future property, it may be hard for most lenders to provide.
You may have applied for a mortgage too many times with different lenders. Banks keep receipts of all the time you tried applying for a loan, even when you failed. With access to your bank statements, lenders will come across this information. If this information is not in the bank, they can acquire it from credit bureaus. Rejections will appear in your credit -check and may affect your creditworthiness largely.
If your age bracket is not within the required limit, you will not receive any approvals. Individuals under the age of 18 do not qualify for a home loan. If you are 45 and above or the retirement age, you are less likely to qualify for a loan. Lenders reject any application of individuals with no or unsteady income