5 Reasons a mortgage application can be denied.

The primary reason to obtain pre-approval for a mortgage before shopping for a property is to ensure, you are looking at properties that are within the price range that you can afford.

Getting pre-approved for a mortgage doesn’t necessarily guarantee successfully obtaining finance- it is possible a mortgage can get denied, even after pre-approval.

Here are the top 5 reasons a mortgage application can be denied:

• Change of employment or a drastic change in income level

There are certain requirements for the length of consistent employment and often unexplained gaps in employment history, will require a written explanation.

A change of employment in similar fields is considered acceptable, unless of course there is a drastic change in the level of income.

There are instances where applications have been denied, based on the fact that the applicant has completely changed career fields.

• Negatives item on credit

It’s really important to know your credit score before you apply for pre-approval.

If you do get pre-approved, continue to pay your bills on time and keep monitoring your credit score

 • Incurring additional debts

It’s important that once you have been approved, that you don’t acquire any additional debts or credit lines.

This could have a detrimental impact on debt to income ratios and can cause an application to be denied

• Loan requirements/Lender Guideline changes

It’s possible that a lender or mortgage product may experiences changes to requirements and guidelines after a pre-approval.

Also, changes to debt to income guidelines and savings required, could lead to a denial.

• Issues with a bank appraisal

There can be many reasons for issues with a bank appraisal, ranging from the appraiser citing repairs to "under-appraisals”, where the bank appraiser cannot substantiate that the value of the property is the same as the agreed sale price.


If you need to speak to a lending specialist or need an appraisal, contact propertyloans@realrenta.com and we will arrange for a representative from our trusted finance partner to contact you shortly.

Marlene Liontis
Tuesday, 4 December 2018

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