Did you get rejected for a mortgage?

It's time to stop and recalculate steps

Have you applied for a mortgage, received a refusal and are considering going to another bank?

Remember that without a significant change in the way the application is presented, it is likely that the other banks will also refuse it

In collaboration with legal zap

02/08/2022

Tuesday, 02 August 2022, 13:31

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What is the best and most correct way to deal with the bank's refusal of a mortgage request? (Photo: ShutterStock)

Getting a mortgage application turned down, even if it's only from the first bank you approached, is a serious challenge.

It is important not to ignore this and to avoid resubmitting the same request, because it is likely that other banks will also refuse, and each refusal will further reduce the chance of getting a mortgage in the future as well.

We met with Martin Boxdorf, a mortgage consultant who specializes in mortgages for rejects, to understand what is the best and most correct way to deal with the bank's refusal of a mortgage application you submitted.

"The bank has several reasons that can lead to a refusal to grant a mortgage, most of them are related to the fact that the applicant has a problematic financial history. First of all, a person who has gone bankrupt, even if only in the past, is like a person who raises a red flag in front of the bank and is seen as having a proven record of not being able to repay Loans. Even people who have consistent problems with bounced checks, enforcement cases, or delays in repaying other debts with the bank, are likely to be refused if they apply for a mortgage."

"Not necessarily. Any other danger that indicates a high probability that the applicant will not meet the mortgage repayments can lead to a refusal. For example, the age of the mortgage applicant. Quite a few people over the age of 60 say that they encountered a refusal, or that the bank demanded from them a particularly high cost of mortgage insurance, which made it unfeasible. The request would be even more complex and the chance of its rejection greater,

"The criteria by which each mortgage application is evaluated are similar to completely identical in the various banks. Therefore, if you are refused at one bank, there is a good chance that you will be refused at another bank, on the same basis, but also on the basis of the refusal you have already received from another bank."

What is the best thing to do after getting a mortgage refusal from the first bank?

"The most correct thing is to stop and consult with an expert on mortgage refusals in order to submit the next application. The consultant will examine the reasons for the first refusal and learn from them what needs to be corrected in the next application. It may be necessary to reduce the amount requested to a more realistic amount, or it is better to wait a longer period and prove financial stability That will make the bank trust you, and it may also be necessary to look in depth at your credit data report."

A credit report is a document that shows your entire financial history for the past three years.

Every foreclosure, bankruptcy, bounced check or loan repayment delay appears in the report. A mortgage consultant knows how to analyze the report, assess the depth of the problem that caused the refusal and the chance of succeeding in getting a mortgage the next time.

"It's important to understand that from the bank's point of view, not all financial problems are of equal severity. If you had several checks bounced in the same month, this could indicate a one-time stumble that happened due to a momentary distress. On the other hand, if you just got fired after insolvency and still haven't found a permanent job , you cannot expect the bank to approve your request without a cooling-off period and a presentation of responsible financial conduct."

"Using the scale method, the advantages and disadvantages of the loan applicant can be assessed from the bank's point of view. On one end of the scale, all the problematic data are placed (returned checks, delay in loan repayments, returned standing orders, etc.).

On the other side are all the data that show financial stability and a high ability to repay a loan, such as a fixed salary, equity, property ownership and any other stable income.

These scales can be presented to the banker and used to convince him that the mortgage applicant is a reliable enough person, despite such and other problems in his past, including the first refusal."

"The most important thing to remember is that there is a limit to the number of applications that can be submitted before the banks start refusing almost automatically. If you exhaust all the options at different banks or at the same bank, even a particularly brilliant mortgage consultant will have a hard time turning the tables on you and getting you a mortgage. Therefore, immediately after the first refusal It's worth stopping and preparing the next application in a way that will maximize the chances of getting approved for a mortgage."

Martin Boxdorf is a mortgage expert for the rejected.

For Martin's economic podcast.

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article courtesy of Zap Legal

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