Top 7 things that can ruin your mortgage application

Mortgage due diligence has evolved over time and financial institutions have become more equipped to probe the past transactions and credit history of applicants. You may not have done anything wrong financially but may still end up getting rejected for a mortgage. There are certain factors that individuals need to consider and maintain to be prepared for any future mortgage requirements. Knowing and avoiding common mistakes can prevent rejection of mortgage applications.

Cash Payments

Though it may seem natural to use cash for most daily transactions, it is recommended to make your transaction in a way that your credit card is regularly utilized. Lenders look at credit history as a main factor to determine the credit-worthiness of applicants

No Credit History

Many people laud the absence of credit on an individual’s portfolio. They may not be entirely correct. While credit does lead to financial obligations, an absence of credit history also delays approval in times of need. The lenders would need to do additional checks and probe further to judge an applicant’s credit-worthiness.

Bad Credit Scores

Defaulted payment should be avoided because they are detrimental to the Credit score. Credit scores are really important and are one of the first checkpoints for lenders. Many rejected applicants are asked to improve credit scores and re-apply for mortgages.

Non-Standard properties

Buying non-standard properties can make approval difficult. Lenders generally prefer to go for loans where the value of the property would not substantially decrease over time. Non-standard properties such as flats above commercial spaces are high-risk properties and many lenders avoid risk. This can lead to application rejection.

Borrowing too much

A person with all the above things right may still get his application rejected if he asks for too much money. Every person is designated to some quantum of the loan depending on their income and the assets they own. When lenders analyse an applicant, they specifically look at the capacity of the applicant to service the mortgage without defaults. It is advised to apply for the right amount of mortgage because rejected mortgages also harm the validity of future applications.

Irregular Income sources

Lenders have a general rule to minimize risk and maximize return. For a lender, an applicant with an irregular source of income means that sometimes an individual may have a surplus amount to service their debts, but it can also happen at times that the individual may not have the requisite amount for debt servicing. This is a red flag for most lenders and such applications may end up being rejected.

Issue with the application

While it may seem very inconsequential, errors in applications is a common reason for rejection. Many people fill incorrect or incomplete details and miss out on additional documents that need to be attached to the application. It is advised to be careful. Other issues may need some big changes but this reason can be mitigated by just being careful.


Applicants wary of above factors can expect a good credit score. It is important to know that Lenders want to give loans and if an applicant is careful of all the above factors, any lender would happily approve a loan for such applicants.

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