How A Virtus Broker Can Help With Your Declined Mortgage Application

Hearing that your mortgage application is “declined” can feel like a punch in the guts. However, hope is not lost. Let’s look at some reasons why applications are declined, and how a Virtus broker might be able to help overcome those issues.

Part 1: Common Reasons Why Your Mortgage Application Might Be Rejected

You’ve Got Poor Credit History

A poor credit history is a significant barrier to mortgage approval. Lenders use credit scores as a primary gauge of an applicant’s financial responsibility. Negative entries on a credit report, such as late payments, defaults, or bankruptcies, raise red flags for lenders. These blemishes suggest a history of financial mismanagement, making lenders wary of the risk of default. Even minor issues can affect your score, underscoring the importance of maintaining a clean credit report to secure mortgage approval.

Inadequate Income or Employment History

Lenders scrutinise an applicant’s income and employment history to ensure they have a steady source of income to meet monthly loan repayments. Concerns arise when an applicant has a history of job hopping, works freelance without a consistent income, or has recently switched careers. These situations can create doubt about financial stability and the continuous ability to repay the loan. Lenders prefer applicants with stable, predictable income streams, reflecting a lower risk profile.

High Debt-to-Income Ratio (DTI)

Your DTI ratio is a critical metric that compares your total monthly debts to your gross monthly income. A high DTI ratio suggests that a large amount of your income is already committed to debt repayments, which can be a ‘red flag’ during the lender’s assessment process. They may conclude that you lack the financial flexibility to accommodate additional mortgage repayments. 

Your Documentation Is Inadequate

Successful mortgage applications depend on providing comprehensive and accurate documentation. This includes, but is not limited to, proof of income, employment verification, asset statements, and a clear record of debts. Lenders require these documents to assess your financial health and the authenticity of your application. Missing or incorrect documentation can lead to delays or outright rejection, as it prevents lenders from fully evaluating your situation.

There Are Issues With The Property

The property itself plays a crucial role in the mortgage application process. Lenders assess the property’s value and condition through an appraisal. Valuation discrepancies, such as an appraisal coming in lower than the purchase price, or legal issues, like unclear titles or easements, can complicate the loan approval process. These issues might affect the property’s marketability or the lender’s ability to recover the loan amount in case of default. Therefore, properties with clear titles and validated valuations are more likely to be accepted as collateral for a mortgage.

Part 2: How A Virtus Broker Can Help You Overcome Application Rejection

Not all brokers are created equal. Here are some of the ways a Virtus broker can help overcome your mortgage application rejection. 

Understanding Lender Requirements

We’re the bridge between potential homeowners and financial institutions. By analysing your financial situation against a particular lender’s criteria, we can identify potential red flags before they cause problems. 

Whether it’s a bank’s policy on employment tenure or a non-traditional lender’s approach to self-employed applicants, we know how to find a fit for your unique circumstances. This tailored advice can significantly increase the chances of your application being approved on the first go.

Improving Credit Scores and Financial Health

One of the most daunting aspects of applying for a mortgage is ensuring your credit score and financial health are in good standing. We can offer personalised strategies to bolster your creditworthiness. This might involve recommending specific debt consolidation loans or introducing you to credit repair services to dispute and remove inaccuracies from your credit report. 

Furthermore, we can provide practical advice on budgeting and saving, helping you to build a stronger financial foundation. 

Navigating Documentation

The documentation required for a mortgage application can be overwhelming. We help demystify this process, ensuring that every piece of paperwork, from proof of income to asset declarations, is meticulously prepared and presented. 

Our experience extends to the nuances of what lenders are looking for in these documents, which helps us to advise on the best way to showcase your financial stability and reliability. By leveraging our expertise, you can avoid the common pitfalls of documentation errors or omissions that might otherwise lead to application rejection.

Debt Management Advice

A favourable debt-to-income (DTI) ratio is crucial for mortgage approval. We can provide advice for managing and reducing your debt, which in turn improves your DTI ratio, and may include strategies such as:

  • Paying off high-interest debts first
  • Refinancing existing loans, or 
  • Restructuring debts to achieve more favourable terms. 

Our objective is to help you present yourself to lenders in the best financial light possible, thereby enhancing your loan eligibility.

Finding the Right Lender

The mortgage market is diverse, with each lender offering different products, terms, and acceptance criteria. We have a comprehensive knowledge of this landscape and can match you with lenders best suited to your financial situation and property aspirations.

 This bespoke matching process takes into account not just interest rates but also loan features, flexibility, and the likelihood of approval given your financial background. 

By tapping into our extensive network and ‘premium’ broker status, you can find competitive mortgage options that you might not have discovered on your own.

Part 3: Additional Resources

Beyond the personalised assistance a Virtus broker can provide, several resources can help prospective homeowners understand and navigate the mortgage application process:

YOUR NEXT STEP: A FREE, 15 MINUTE CREDIT ASSESSMENT OVER THE PHONE 

Facing a mortgage application rejection can be disheartening, but it’s not the end of the road. With the right guidance from a Virtus broker, you can address the issues leading to rejection and improve your chances of approval. 

In a quick phone call with a Virtus mortgage broker, we’ll quickly evaluate your options and give you a better understanding of your ability to save a deposit, and of course make the step into investment property ownership. Or, if you’re already an investor, we’ll see how we can help you purchase your next property (and beyond). 

In summary, our free credit assessment helps you:

  • Get a more suitable loan structure
  • Pay less interest and/or fees
  • Borrow more money and better leverage current assets
  • Use data and methodologies to make informed decisions
  • Build your wealth and live the life you’ve always wanted

Unlike some banks (where you often meet with a junior employee), and some other brokers (where you meet with a commission salesperson), your free credit assessment at Virtus is with a lending specialist who will give you expert, independent advice specific to your situation.

Don’t delay anymore. A quick phone call with us could be a game changer.

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