7 things that can derail your mortgage application

Last updated on November 25th, 2021 at 09:20 am by Bill Tsouvalas

No one applies for a mortgage for fun, which means that whatever your situation is, you really need this loan. Obviously, in such circumstances, you literally cannot afford to make mistakes – your application must be impeccable. Do you know what can come in between you and the loan you are seeking? Here are 7 things that can derail your mortgage application.

Paperwork delay

This can seem like it’s not a big deal – they’re just papers, you’ll send them later. Not so fast – required paperwork is important and it can make or break your deal. Sure, if you’re missing some documents, you are likely to still get a loan, but it will be a restrictive one and those entail a lot of conditions. Even worse, you may find your ideal property, only to learn that the lender has received the rest of your documents and is rejecting you on account of something they disliked.

Not considering all options

Everyone knows that you don’t take the first offer, no matter what you are shopping for. The same goes for lenders. First, you have to “shop around” and see what else is out there. Different lenders will offer different amounts and different conditions, and you have to be aware of all of them.

A small deposit

With today’s financial reality, the days of no-deposit home purchases are over. In order to score a home, you need to put down some real money, to the tune of at least 5% of the price of purchase. But expect lenders to ask for even more than that. This may or may not be a problem for you, but if you’re not rich, it probably is. This means that you need to research the market very well and figure out exactly how much you need before making up your mind about purchasing. See what the average deposit is and add 5% to that.

Being unaware of your real options

The most important lesson here is to know what you are really capable of borrowing. That huge, luxurious house may be calling your name, but unless you know for sure you can swing the money to buy it, you’d better keep looking. Making the mistake of setting your heart on a property that is too expensive or worse, making an offer that goes beyond your means can come back to bite you in the ass.

Failing to declare all expenses

It’s important to let your lenders know exactly what your expenses are, including child care and emergency credit cards. Whether you omit them by mistake or on purpose, the lenders will find out, and they can very well reject your application because of this.

Not disclosing missed payments

When you are applying for a mortgage, you cannot afford to have missed payments. Whether you’ve forgotten about them, missed them on purpose, or couldn’t pay them on time, lenders will know. Not only that, but they will reject your application. One default (three months of failure to pay) can derail you for as long as five years on a loan.


To put it simply, you can’t be unemployed and take out a loan to buy a house. It has to be one or the other, unless you have a good amount of money stashed away to pay your mortgage. If you haven’t been receiving income for 12 (or at least 6) months, they will most likely reject you altogether.

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