Complex incomes lead to majority of high net worth borrowers facing mortgage rejection

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A lender rejecting your mortgage application can be stressful and time-consuming, and it might even mean you miss out on buying your dream home. A survey has found that most high net worth individuals aren’t securing their preferred mortgage. Read on to find out why and how a mortgage adviser could help you.

According to Mortgage Solutions, 90% of corporate executives, finance professionals and entrepreneurs with average earnings of more than £510,000 were rejected for a mortgage.

Between 2019 and 2024, 84% of high net worth applicants had to accept a mortgage with a lower loan-to-value (LTV) ratio. It could mean home buyers need to put down a significantly higher deposit or adjust their budget when searching the property market.

The average LTV reduction was 20%. On a £1 million property, this reduction would mean needing to find an additional £200,000 to access a 60% LTV mortgage instead of an 80% deal.

The challenges have put off almost two-thirds of individuals with a high income from buying a home, and 56% said it discouraged them from buying an investment property. If you’re worried about the obstacles you could face when applying for a mortgage, understanding the reasons lenders reject applications could be important.

Bonuses or income in foreign currency could lead to mortgage rejection

The main reason why high net worth clients face mortgage rejection is that their income may not be straightforward.

Lenders will carry out affordability checks to assess how likely you are to maintain your mortgage payments. They’ll consider your regular income when doing this. However, if your finances are complex, a lender may not consider all your sources of income.

For example, even if bonuses make up a significant proportion of your income, a lender may not include them – or only include a proportion of them – as part of their affordability tests.

Moreover, around a third of high net worth clients said their mortgage was rejected because they receive income in a foreign currency. So, if you’re working for an overseas business or are self-employed with clients around the world, it could present difficulties.

In addition, a fifth of high net worth clients questioned said the nature of their employment, such as being a partner of a firm, led to their mortgage application being rejected.

A lender rejecting you based on your role or not taking all your income into account can be frustrating. In these circumstances, working with a mortgage adviser may be useful.

Lenders will set their own criteria, and a rejection from one doesn’t mean your home ownership plans are out of reach.

A mortgage adviser can assess the market based on your circumstances and identify the lenders that are more likely to accept your application. This could be a lender that specialises in offering mortgages to those with complex incomes.

A mortgage adviser will also be on hand to offer guidance throughout the application process. They could spot potential errors in your application or highlight where further information may be needed to make the process smoother.

When you apply for a mortgage, a lender will often carry out a hard credit check, which will remain on your credit report for two years. Several hard credit checks close together could be a red flag for other lenders. So, working with a mortgage adviser from the outset could be valuable.

A third of applications were rejected due to the property

Lenders don’t just consider your wealth when assessing your mortgage application, but the property you want to purchase too. Around a third of high net worth clients surveyed said the property they wanted to borrow against led to rejection.

One of the key property reasons a lender may reject your application is that they believe the property’s valuation is below the amount you’ve agreed to pay. This poses a risk to lenders as if you default on the mortgage and the property is repossessed, the sale price may not cover the outstanding debt.

So, when you’re negotiating a price, keeping this in mind might be useful.

Among the other reasons a lender might reject your application based on the property are:

  • The leasehold is too short
  • The ground rent or service charges mean it doesn’t pass affordability checks
  • The property is located near commercial premises
  • The property is unusual or listed.

The good news is that there may be specialist lenders who may take a different view of the property and your application. Again, a mortgage adviser could help you assess which lender might be right for you.

Contact us to talk about your mortgage needs

If you’re worried about your mortgage application being rejected, we could help. We’ll take the time to listen to your needs and review the options with your circumstances in mind. Please contact us to arrange a meeting.

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

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