March 18, 2025

What Can Stop You from Getting a Mortgage

Many lenders have tight restrictions on whom they lend money to. Even a minor mistake can lead to your mortgage application being rejected.

Fortunately, if you understand the potential pitfalls of mortgage applications and get professional help from a mortgage broker, you can avoid mistakes and enhance your chances of approval.

Common Reasons Why Mortgage Applications Are Rejected

Here are the most common reasons why lenders reject mortgage applications and what you should do to avoid them:

Poor Credit Score. A poor credit score or a questionable credit history can cause lenders to reject your application. If you wish to apply for a loan, keep an eye on your credit score and take steps to improve it.

You may be able to improve your credit score by:

• Meeting your financial obligations on time. Pay your bills when you’re supposed to and follow your repayment schedule for any other loans you have.
• Resolving credit provider disputes as soon as possible.
• Not overusing your credit.
• Not making too many credit requests.

Insufficient Savings. Lenders want you to have around 10-20% of the property purchase price saved, and they want to see that you have savings built up to prove that you have good financial discipline. In general, you should have at least three to six months of regular savings. This will prove that you have financial discipline and that you’re a reliable candidate for a mortgage.

People who manage their money well are more likely to make their payments on time and without issue. It’s important to note that it’s not enough to simply have money in your savings account – lenders need evidence of genuine savings.

Be sure you keep up with your savings account and regularly make deposits into your savings to show that you are disciplined enough to repay a mortgage.

Irregular Employment. Lenders may reject you if you haven’t been employed long enough. If you have been employed for less than six months and or have been self-employed for less than two years, you may be rejected due to your employment situation.

You should ideally maintain your current job for at least six to twelve months before applying for a mortgage. If you are self-employed, it’s recommended to have a consistent work history of two to three years. There are always exceptions to these rules however.

Your Chosen Property. Your lender can reject your mortgage application if they don’t like the property you’ve chosen. If you default on your mortgage, your lender will take your property and sell it to make up for the loss. If they think they won’t be able to sell your property, they will most likely be hesitant to lend you the funds necessary.

Furthermore, they may deny your mortgage if they think your property is worth less than what you’re paying for it. The lender may require you to get a valuation on the property to confirm the purchase price is what the property is worth.

These problematic properties can include unorthodox homes properties with significant maintenance outstanding or houses in areas prone to floods, fires and other risks. Select a marketable property that is likely to sell for the amount you purchase it for.

Failure To Disclose Important Information. You must ensure you’ve correctly filled out your application and supplied all of the required information and that all information provided is accurate. You must be honest about the information you need to give.

Not disclosing the correct information can be seen as fraud, regardless of whether you withheld information on purpose or by accident. This mistake can make you appear untrustworthy.

Consider working with a mortgage broker who can assist you with the mortgage application process. They can ensure that you’ve provided the right information and that there is no incorrect or missing information from your application.

Poor Spending Habits. Your lender may request bank statements when evaluating your loan application. If you have poor spending habits, they may view you as an unreliable applicant.

Managing and spending your money responsibly will show that you have excellent financial discipline.

Poor Loan History. Your loan history will show if you have a good track record of repaying money you owe or if you’ve frequently defaulted or made late payments. Naturally, if you’ve shown in the past that you’re a responsible applicant who consistently makes payments on time, lenders are more likely to trust you.

Furthermore, if you have multiple other loans that you’re currently paying off while you’re applying for a mortgage, lenders may reject you. It’s best to take care of other debts before you apply for any new loans. However, if you have debt but also have a good history of managing debts, then your lender may still approve you.

Improving Your Changes Of Mortgage Application Success

Regardless of what obstacles you’re facing, we at Capital Advice are here to assist you with the mortgage process.

To get started, please call us on (04) 495 5900 or send us a message through our website.

Reach out to Capital Advice for reliable, professional mortgage support today.