Mortgage Declined After AIP

There is a range of reasons why a mortgage application could be declined after the AIP. Here are some of the main factors that could jeopardise your mortgage application.

• Paperwork issues - with the amount of paperwork that's involved with applying for a mortgage, there are plenty of opportunities for errors to slip in. It could be an issue when filling out paperwork or an administrative issue made by the mortgage lender's team. If it's a severe issue, your application could be declined
• Discrepancies in your paperwork or concerns about foul play - as well as harmless mistakes, a lender will be looking out for any chance of foul play. If the lender suspects that you've lied on your application, or they have any reason to believe the application is fraudulent, it will be declined
• Change of income - the loan value stated on your AIP will be based on your declared income. If your income changes, this will also change the size of the loan you can afford. If your income drops, you might no longer qualify for the mortgage presented in the AIP
• Difficulty proving income - it's relatively simple to show a lender sufficient proof of your income whether you’re in regular employment or self-employed. However, if for example you’re a waitress and receive a lot of cash tips lenders won’t typically accept this as a form of bonus or commission
• Change of circumstances - even if your income or outgoings gave you a certain level of affordability for the initial AIP, if your circumstances change, you could be rejected. If your outgoings increase this could lower your possible loan size. If your employment has changed, even to a job with the same salary, it could suggest that your income is less certain. This is particularly the case if you have lots of recent employment changes
• A credit check shows issues - lenders will usually look at your credit history before offering an AIP and again when they’re underwriting your full mortgage application. If any new findings are uncovered in your second credit check, for example you’ve taken out a new line of credit, or have had any recent issues such as late payments, defaults, county court judgments, bankruptcy, etc. the lender may reject you
• Unsuitable deposit source - you'll need to prove the source of your deposit to show the lender that it's acceptable. While lenders almost always accept personal savings or gifts from parents, there are less preferable deposit sources. If a lender later finds out that your deposit is a loan from parents or comes from gambling, overseas savings, friends, employers, or untraceable cash funds, your mortgage could be declined
• Taking out other loans - if you take out other loans after your AIP, this could affect how lenders see you. Taking out other loans will affect your affordability as well as suggest that your financial position is not as stable as previously thought
• Lender criteria - there are 2 issues with criteria that you might face after the AIP. Some lenders do not tell you all the finer details of their criteria before the AIP. This means that you might find you don't meet all their criteria, even if at first you thought you were eligible. There is also the risk that a lender could change their criteria during your application. Mortgage lenders change their criteria frequently as they have to keep up with the current market and protect themselves against new risks. This unfortunately means that criteria could change and the lender is no longer able to offer you a mortgage
• Incorrect house value - the property valuation stage usually happens later in the mortgage application process. If the house or flat value is found to be significantly lower than the loan amount, a lender may not be willing to offer a mortgage on it. This is because they need to ensure the property can cover the total value of the loan if you default on payments and they have to repossess and sell the property
• New problems with the property - if there are new issues with the property, such as contaminants, damage, structural concerns, or new information about the area, this could make it too high a risk for lenders to want to make a mortgage offer

Of course, this list is not exhaustive. There are many factors that could come into play and lead to your mortgage being declined. You should be sure to get expert advice from a mortgage broker if you're unsure why you have been declined after AIP.