If you’re wondering why your mortgage application was rejected, this ultimate guide will help. It runs through all the reasons why this might have happened, and how you can fix them. Some of these reasons include having a poor credit score, not having consistent income, and having too many hard searches on your record. Read ahead if you want to know what the rest are.
Borrow Less
One of the most likely reasons your mortgage was rejected is the bank calculating that you won’t be able to pay them back. Lower the amount that you want to borrow, or elongate your payment plan. When it comes to lowering the amount, you want to borrow, you can look into mortgage refinancing, if you already own one property. You’d get a large cash sum that you can deduct from the mortgage that you’re trying to take. This would especially be smart if you have a lot of equity in the first home.
Just remember to look for great low rates for mortgage refinance options in your city. You can try borrowing from another bank too. The bank that you got rejected from may be especially strict.
Make Your Income More Consistent
The bank might have rejected your application because they didn’t think your income was stable. If you work on contract, or a are freelancer, this will be a major issue that you would face. You can try taking more jobs and clients to fill this gap.
Reduce the Hard Searches
If you’ve applied for multiple credit cards in the past year, there would be quite a few hard searches on your record. This can look suspicious, and cause a lender to not want to work with you. It’s always smart to stay away from new credit cards up to 6 months before a home loan.
Improve Your Credit Score
When you apply for any type of loan, it’s important that you have a good credit score. Lending to you would be risky, otherwise. Contact your local credit bureau and ask for a copy of your credit sheet. Start paying back any debts and bills you owe if your score is low.
Fix Your Application Form
There may be issues with your application form. They may not be anything serious -you may have just written down wrong information, or made spelling mistakes.
What Do you If Your Mortgage Has Been Rejected?
Are you still wondering what should you do if mortgage has been denied at closing in Canada? Before wrapping up, we thought about touching on this. It might be time to contact a third-party lender instead of a bank. They tend to be more lenient with customers.
Final Thoughts
There are quite a few reasons why your mortgage may have been rejected. The most likely culprit would be the bank calculating and finding out that you won’t be able to pay them back. Also, you would get your application rejected if you have poor credit.
