3 Common Reasons Your Mortgage Application Keeps Being Delayed
Mortgage applications aren’t known for being speedy things, but you could receive a formal offer for a mortgage loan within two weeks of applying. It then takes between 6 and 12 weeks to actually close on your property and buy the house, but many people suffer from mortgage delays. Your application keeps getting pushed further and further back before you’ve even been given an offer. It’s been six weeks, and you still haven’t been approved or denied, so what causes these delays and is there anything you can do about them?
#1 Missing Paperwork
Mortgages require a lot of paperwork so lenders can verify your identity, where you live, how much you earn, and so on. If you don’t submit enough evidence to go with your application, you’ll be contacted for more information. What’s more, your paperwork might not be clear enough for the legal team to use – for instance, you’ve uploaded a blurry photo of your bank statement. Create a checklist of the paperwork you need for a mortgage and be sure it’s in order before you apply.
#3 Issues With Your Credit History
Lenders will look at your credit history to determine your financial worthiness before accepting a mortgage application. First off, if your credit score is low and you have a history of high credit utilisation, they’ll usually deny your application.
But delays may happen if there are inconsistencies on your credit report. For example, there are bank accounts that say they’re open, but you closed them years ago. Or, you’ve got unpaid loans listed when you’re debt-free. Always go through your credit history and check for inconsistencies before you apply to avoid this.
#3 Financial Changes
It’s possible that you’ll go through a big financial change in the midst of a mortgage application. This could be the loss of a job or being hit with a new debt that came out of nowhere. But it can also be something positive – like winning the lottery or getting a pay rise at work. Positive financial changes still impact an application because they can change things like the proposed loan size, term, and interest rates. Try your best to avoid any financial changes during a mortgage application. E.g. If you know you’re up for a raise or bonus at work this month, then it’s better to apply after this comes through.
What To Do When Experiencing Mortgage Delays
The main thing you can do is get your finances in order and avoid any drastic financial changes. However, if you’re desperate for a mortgage because you’ve seen a house and there’s loads of competition for it – and you’ve already had a bid accepted – then you may be able to use a bridging loan to cover mortgage delays. Using a bridging loan calculator, you can determine how much this will cost, but the idea is that you receive a loan from a broker that lets you put a deposit down on the house and pay for it right away.
This is a type of short-term loan that usually needs to be paid off fairly quickly, and it will use your mortgage as leverage. So, you still apply for the mortgage, but the delays aren’t a big issue as your bridging loan has helped you buy the house. Now you wait for the mortgage to finally come through so you can pay off the bridging loan.
Is it the ideal situation? No, but it can help you deal with mortgage delays if you’re hit with them. Obviously the best idea is to prevent these delays in the first place, which you can do by following some of the tips above.
