What to do if your mortgage application has problems

• You may still be able to borrow the amount of money you needed through a different mortgage product or lender with different lending criteria.
• Getting rejected doesn’t affect your credit score. But applying for numerous mortgages in a short space of time will, as each application requires a “hard search” on your credit history. You need to understand why you were rejected before you apply for a new mortgage, to make sure you don’t get rejected again & risk impacting your credit score through 3+ applications.
• If you haven’t been using a mortgage broker, now would be a good time to talk to one so they can help you understand why you were rejected & guide you to an appropriate mortgage.

This means the lender thinks the property is worth less than the price you offered for it. They may offer to lend you a lower amount, or may reject your application completely.

If they offer you a lower amount, your options are:

• Reduce your offer on the property, & see if the seller will accept a lower price.
• Challenge the down valuation. You would need to find 3 recent, comparable house sale prices at the same amount as your offer from the land registry, which the estate agent may be able to help you with. Or, if the valuation was “down valued” due to the repair costs, challenge these if they look too high.
• Choose a different mortgage product with a higher loan-to-value ratio, and likely higher interest rate. Remember this means you are effectively using your deposit to “overpay” for the property.
• Apply to a different lender, who uses a different surveying company in the hope that they will value the property higher (best to have help from a mortgage broker with this).
• Stump up the extra cash yourself to cover the shortfall.
• Pull out of the purchase.