What Does It Feel Like To Be Refused A Mortgage
Below is a MRR and PLR article in category Finance -> subcategory Wealth Building.
What Does It Feel Like To Be Refused a Mortgage?
Introduction
Being refused a mortgage can be a daunting experience, leaving many people frustrated or confused. However, understanding the lender's perspective may offer some clarity.
Lender's Perspective
Mortgages involve significant sums of money. For instance, the average outstanding mortgage in the UK is nearly £100,000 across almost 12 million households. Naturally, lenders aim to minimize risk, which often involves declining high-risk applicants.
Types of Borrowers
In the UK, borrowers are generally categorized as either prime or sub-prime. Prime borrowers usually have a steady, provable income and a clean credit history. Sub-prime borrowers, on the other hand, may face greater difficulties in securing a mortgage.
Reasons for Rejection
Being turned down for a mortgage could result from past financial issues like repossessions or County Court Judgements. Surprisingly, remortgaging can sometimes help resolve credit issues by releasing equity or demonstrating debt repayment capability. In such cases, seeking a specialist lender might be beneficial.
Challenges for the Self-Employed
One group that often struggles with mortgage approval is the self-employed. Without complete accounts or proof of income, banks perceive them as higher risk. This is why many self-employed individuals opt for self-certification to bypass income verification.
Unexpected Rejections
Even those with steady employment and good credit might face rejections. If this happens, checking your credit record through UK credit agencies is advisable. This can be done online for a small fee.
Alternative Solutions
Being refused by a high street lender doesn't mark the end of your borrowing journey. Specialized lenders offer mortgages at competitive rates for those in the sub-prime category.
Conclusion
While being denied a mortgage can be unsettling, exploring other lending options and understanding the factors at play can lead to successful outcomes.
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