A mortgage expert has explained why eight common mistakes could lead to your mortgage application being delayed or rejected. In a survey of 500 UK homeowners, David Wilson Homes identified several errors and found many people didn’t know about them.
From gifted funds to recent job changes, there are lots of lesser-known mistakes that could catch out buyers trying to secure their new home. David Wilson Homes has collaborated with Terry Higgins, Group Managing Director at The New Homes Group, to break down the eight common mistakes and why they could cause trouble.
The survey suggested that two-thirds of Brits are unaware that gifted funds could affect the outcome of their mortgage application. Mortgage expert Terry Higgins explained: “While gifted deposits can be a great way to support first-time buyers, they can also raise potential red flags during the mortgage application process if not properly documented.”
He added: “Lenders need to ensure that the funds are legitimate and not loans in disguise, which could affect affordability calculations. Without clear evidence of the source and nature of the gift, applications can face delays, additional scrutiny, or even rejection. It’s crucial to work closely with your lender and provide the necessary paperwork to avoid these issues.”
The second most common mistake mortgage applicants make is not keeping track of their bank transactions or failing to address any that might appear unusual, with David Wilson Homes finding that half the homeowners surveyed were unaware of the negative impact.
Higgins said: “Unusual bank transactions can make lenders hesitant because they need to see clear, stable finances. For example, large unexplained deposits, frequent account transfers, or payments to unfamiliar recipients might raise questions. Lenders may ask for more details, which could delay or complicate your application. To avoid issues, keep your transactions straightforward and be ready to explain anything unusual.”
Almost half (48%) of homeowners are unaware of this common mistake, according to the survey. “Irregular income can make it harder for lenders to assess your affordability,” shared Higgins. “Things like freelance payments, cash deposits or ad-hoc bonuses might seem unreliable without proper documentation. To avoid issues, provide clear records like invoices or tax returns to show your income is consistent over time.”
The survey found that 12% of respondents had an incorrect address on their photo ID, and 73% had not updated their ID to reflect their current address in the past 6 months. Explaining why this could be a problem, the expert said: “Having the correct address on your ID is essential for a smooth mortgage application process.
“Lenders use your ID to verify your identity and address, and any discrepancies can raise red flags or cause delays and can often lead to your application being declined. Ensuring your ID is up-to-date shows accuracy and reliability, which are crucial when applying for a mortgage.”
Similarly, it’s important to document any changes if you’re starting a new job in the middle of a mortgage application. “Changing jobs during a mortgage application can complicate the process, so it’s vital to keep thorough documentation,” Higgins explained.
“Lenders need to see evidence of stability and continuity in your income. Providing details like your offer letter, contract, and recent pay slips can help reassure them that your new role won’t impact your ability to repay the loan. The lender may also want to know if you have a probation period with your new employer.”
“Lenders need a complete picture of your financial commitments to assess your affordability accurately. Any undisclosed debt discovered later could delay the process, decrease the amount that you can borrow, or even result in a declined application.
“To avoid these issues, always be transparent about all financial obligations, no matter how small, and ensure all debts are fully disclosed upfront,” Higgins commented. David Wilson Homes added that these could include personal loans, student loans, and Buy Now Pay Later plans.
The mortgage expert explained: “Lenders rely on accurate and complete paperwork to assess your financial situation. Missing documents or errors could lead to a rejection or extended processing times. To avoid this, double-check all forms for accuracy, ensure all required documents are submitted, and communicate promptly with your lender if anything is unclear.”
While only 29% of applicants are unaware of the potential negative impacts of credit report errors, it’s essential for everyone applying for a mortgage to review and correct their credit report, says David Wilson Homes.
Higgins added: “Even small inaccuracies, such as incorrect account balances or missed payments, can lower your credit score and affect your eligibility decrease the amount that you can borrow. To avoid this, regularly check your credit report for errors and dispute any discrepancies before applying for a mortgage.”
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