Everyone seems to be getting a mortgage; this is because of the record low rates in 2020. Mortgages are one of the easiest things to get when you have your papers in order, but people still harbor fears of being rejected when they apply for a mortgage. There are several varying reasons why people get rejected for a mortgage, but it is always an unpleasant experience. With the influx of people getting mortgages in 2021, people are hoping that the trend carries on to 2021, but that might not be the case. Below are some weird reasons why you might not be getting a mortgage in 2021.
You’re Self-Employed
You would think that being self-employed would increase your chances of getting a mortgage, but that isn’t always the case. It might be exactly why your application gets rejected in 2021. Being self-employed does not guarantee your income, and with the volatility of the economy, it is hard to trust that you would have enough money to pay back the loan. This gets worse if your business is less than two years old as it doesn’t show you have a track record needed to give the bank confidence that you would be able to service the loan.
Mortality Rate in the Country
Due to the coronavirus and how contagious it is, lenders might have concerns about giving out loans when there’s a high mortality rate in the country. Lenders might want to wait till the vaccine has been distributed, and there is a low mortality rate. Your lender might reject your application because they want to avoid the risk of deteriorating health soon after the loan is accepted.
You Don’t Match The Lender’s Profile
Another weird reason why you are likely not going to get a mortgage in 2021 is that your profile doesn’t match the one the lender is looking for. Some lenders are looking to attract a certain type of borrower that you just don’t match, and this would lead to your application getting rejected by the lender. The preference could be based on location, race, or income level; it is best you work with a mortgagee advisor that will direct you to the right lender that’s more probable to favor you when reviewing your mortgage application.
Inadequate Deposit
A common reason why you might not be getting a mortgage in 2021 is that your deposit is simply not enough. Most lenders require you have a percentage of deposit available for the home before your application would be reviewed. With the economic volatility, enough deposit guarantees the lender that you have enough and will be able to service the loan once it is given to you. If you don’t have a deposit in place, chances are you might have problems servicing the loan when you should.
The House Simply Isn’t Worth It
Many times, the problem isn’t with your credit report or the applicant’s profile but simply because the house isn’t worth it. With the rise of buyers in the industry, the price of homes has continued to rise. When collecting a loan, you bear in mind that if you can’t pay the loan back, the bank or lender is entitled to repossessing your home and selling it offers to get back the home. The rise of home values isn’t sustainable, and prices of homes are bound to return to normal soon. The lender might be worried that the property isn’t worth the price and won’t be beneficial in recouping the loan if you can’t meet up with loan payments. You can avoid this by comparing the house’s current and potential value on platforms such as IQ; this would help you decide if the house is simply overpriced and would depreciate in the future.
References:
https://www.stephaniemurray.mortgage/blogs-events/blogs/top-10-reasons-people-get-rejected-for-a-mortgage/
https://www.moneyadviceservice.org.uk/en/articles/why-mortgage-applications-are-declined
