Mortgage applications 'rejected out of hand'
Thursday, 03 Apr 2008 16:22
Mortgage applications 'rejected out of hand'
With lending conditions in the UK market continuing to deteriorative, MoneyNet.co.uk has warned mortgage applications may now be "rejected out of hand".
The financial comparison site warns a borrower must be in possession of an impeccably presented application with all supporting information and a seamless credit history if they wish their request to be heard.
As such potential borrowers are advised to check and double check their applications if they are to stand a chance of getting a mortgage at competitive rates. This applies even if borrowers have had no difficulties in the past.
"These are unprecedented borrowing conditions as lenders continue to be squeezed," explained MoneyNet chief executive, Richard Brown.
"With mortgage lenders swamped by demand and under increasing pressure to clear the backlog, incomplete or inaccurate applications are likely to be rejected out of hand."
According to the website there is a 30 per cent shortage of in the availability of mortgage finance available at present – forcing borrowers to make themselves more attractive to lenders.
"Brokers know the form and the good ones have learnt the art of presenting an application in the best light to maximise their chances of success – but now those applying directly are going to have to take a little more time and care over their applications," continued Mr Brown.
"Borrowers need to be aware that mortgage finance is likely to be in short supply for a time, meaning that the lenders can now pick and choose who they lend to.
"To succeed in this market, borrowers should be making it easy for the underwriter to say yes rather than no."
Lenders including
the Co-Operative Bank first direct have recently withdrawn mortgage products from the market.
"Welcome to the new lending universe – the rules have changed. Barely a couple of months ago lenders were fighting each other for custom," said Mr Brown.
"That has all gone. Banks and loan firms are only going to lend to those who they are sure can repay. Follow our guide and you’ll be in with a good chance. If not, forget it."
MoneyNet is offering the following tips to would be borrowers:
Present your application fully completed with all relevant information. Provide a supporting letter explaining any unusual circumstances. Get a copy of your credit report and make sure your information matches the report - if not, provide reasons for any discrepancies. Be realistic with your expectations – any unusual aspects to your application may mean paying a premium on the rate. If your income is irregular or from multiple sources provide evidence going back as far as possible and as much reassurance as possible that it will continue. If applying for a high income multiple provide a realistic budget planner with as much detail as possible. If you have other assets then provide full assets and liabilities statement with your application. If there is any history of adverse credit or missed payments provide a full explanation of circumstances which should include a realistic explanation as to why this won't happen again.