Reasons Why a Mortgage Might Be Declined After Offer
In-Depth Credit Check
People who get declined after an agreement in principle are often very confused. The source of this confusion lies in what an agreement in principle actually is. This is not a formal mortgage offer, but rather an indication of intent should your application satisfy all requirements during in-depth checks. These comprehensive reviews of credit and financial history can bring to light additional information that influences the decision to lend.
Material Change in Facts
As we’ve discussed, once you’ve got a formal mortgage offer, it’s not always plain sailing. Sometimes, a significant change in your circumstances can prompt a lender to withdraw their offer. Mortgage terms differ, so what constitutes a material change will vary offer to offer. Typically, though, a material change in facts is any major event in your life that will impact your ability to repay the mortgage; for example, being made redundant, or having your working hours reduced.
Mortgage Valuation Issues
Sometimes an offer will be withdrawn following the mortgage lender’s property valuation. The aim of the valuation is to determine whether the property is worth what you’re paying for it. A down valuation can at worst prompt an immediate offer withdrawal, and at best reduce the amount they are willing to lend. This is also likely to happen if the survey identifies serious issues with the property’s structure or condition.
Learn more: What Should You Do if Your Mortgage is Declined After Valuation?
False Information or Suspected Fraud
If your lender has any inkling that you may be committing mortgage fraud, they will immediately withdraw their offer. This might happen if you lie or exaggerate your income on the application form, downplay certain aspects of your financial history, or make simple mistakes filling it out. To prevent this, your best bet is to contact a professional mortgage advisor. They will go over everything before you submit, making sure your application is error-free.