There are lots of reasons to consider buying your own home, particularly if you’ve spent a few years in rentals. No matter how great a rented property seems when you first move in, niggling issues often arise and can even cause problems between the landlord and yourself.

In addition to this, if you sit down and work out how much you actually pay out in rent on a monthly basis, you begin to realise that you are spending a significant amount of money to effectively line someone elses pockets, and if you are not simultaneously saving towards a house deposit, you are not getting any closer to owning your own home. So it makes sense to buy a home with a mortgage as soon as you are realistically able to do so.

Applying for mortgages

Your next step, naturally, will be to go ahead and apply for a mortgage, but what happens if your application is rejected? Some applicants face numerous rejections, yet their earnings seem more than sufficient to qualify for mortgage offers. If you’re worried this could be your situation, read on to discover some of the financial mistakes that could result in refusals to grant mortgages.

Financial problems that may hurt your mortgage application

Mortgage applicants are rejected for a variety of reasons, some of the most common include:

Poor credit history

Renting your home is never cheap, and if you’ve had to scrimp and save along the way, it’s quite likely you’ve racked up a few late payments. Even when these debts are settled, they’re still noted on your credit score. This tends to be lower, as a result.

You may not have any CCJs or defaults on file, but any missed and late payments to creditors can work against you.

Check your credit score before making your mortgage application, this service is free if you contact all the credit score agencies directly. There are ways you can build your score back up, so it’s useful to find out where you stand.

Too many debts

Your mortgage lender will take a look at all your outstanding debts, and high levels of debt can cause an automatic rejection.

Poor management of current bank account

Your current account is an indicator of your ability to manage your money and budget for all regular payments. Just like the way you could have built up a poor credit record, if you dip into a negative balance or go over agreed borrowing limits, mortgage lenders may reject your application.

Again, issues of this nature can be rectified if you put a strict budgeting regime in place prior to making any applications for mortgages.

Access to high levels of credit

It may seem bizarre, but another reason you could be turned down for a mortgage, or offered mortgages at sky-high rates, is because you’ve got too much credit! If you own several credit cards, with large available credit limits, you may want to think about closing some down.

Lenders can get the jitters in this sort of situation due to worries that you could be under intense financial pressure if you accessed all available credit in one go.

Joint applicants have similar issues

If you’re applying for a joint mortgage, all the above money mistakes could affect your co-applicants status, too. It is important that all applicants are upfront about their finances and any possible issues at the outset. You need to get together with all joint applicants, and go through all your accounts and credit records with a fine tooth comb before contemplating making any kind of mortgage application.

Some final issues that can cause lenders to reject any mortgage applications include:

Self-employment or contract employment, most lenders are ideally seeking applicants in permanent, verifiable jobs and so will require further proof of earning from self-employed workers.
Payday loans or short term loans can also be a problem for mortgage applicants. Even if you’ve paid any previous loans off in full, they can still show on your credit file for up to six years and lenders may slap higher interest rates on mortgages as a result.
– Errors by the lender may not immediately spring to mind, but if you feel you’re unfairly rejected for a mortgage this could be due to administration mistakes on the part of the bank/lender.

Basically, mortgage lenders will often work to demographic guidelines, and if your application doesn’t fit their criteria you could be in for rejections all the way on this.

What you should be doing to get your mortgage approved

Now you’ve absorbed all the information in this post, you need to get your finances in shape so that they appear in the best possible light. You can see just how critical maintaining a good credit record and banking history actually is, and spending a few months sorting out problems will pay dividends in the end.

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