A lender may decline a mortgage after a valuation if the value you indicated on your mortgage in principle was far below or above the property’s true value. A lender may have a loan to value range which is part of its lending criteria and could decline your mortgage after a valuation if it doesn’t fit its criteria.
The most important thing to do when a mortgage has been declined is to not make rash decisions such as applying for other mortgages with not even knowing why your initial mortgage may have been declined.
Why was your mortgage declined after valuation?
The mortgage could have been declined because of the property’s value but it could also have been declined for other reasons which don’t have anything to do with the properties value.
The mortgage could have been declined during the underwriting process when the mortgage lender found something that concerned them. They could have discovered this thing late in the process e.g a payday loan they missed when initially reviewing your credit profile or a financial association with someone who has a very low credit score or has sanctions, fraud or anti-money laundering warnings.
The point is your mortgage could have been declined for so many reasons but it is very important to find out why it was declined before you begin to make any decisions.
Can a mortgage be declined after valuation?
Yes, it is very common for mortgages to be declined after valuations. Different mortgage lenders may carry out different types of valuations. Most mortgage lenders will simply do an online valuation but there are some which still carry out an in-person valuation on the property which is more like a property survey and may reveal more information than an online valuation.
Example, the valuation might reveal that Japanese knotweed is growing at the neighbour’s property and is very likely to make its way to your property in the near future. This sort of discovery is enough to make a mortgage lender decline an application as the home could potentially be worthless due to the discovery of the Japanese knotweed.
It is also likely that the property value you indicated on the agreement in principle and the property value you have now put on your mortgage application has now changed which will cause the mortgage lender to declined your mortgage after a valuation of the property and even after giving you an agreement in principle.
If the mortgage lender also finds anything which devalues the property during the survey or the mortgage lenders online survey simply states that the price at which you are buying the home is far beyond its value then the mortgage lender may decline your application or simply ask you to increase your mortgage deposit to cover the deficit as they will only lend within their loan to value(LTV) criteria and your property is outside of this band due to the difference between its price (the price you are agreeing to pay) and the mortgage you are eligible for.
A property can be valued lower for a variety of reasons:
- It may have roofing issues
- It may have structural issues
- The building materials may not be standard brick. For example, it could be made of timber.
In some case, the property may just not be within the lenders lending criteria and this may be discovered only after the mortgage has been declined.
What can you do if your mortgage is declined because of a valuation?
If your mortgage is declined after a valuation you can try to prove to the mortgage lender that the property falls within the same bracket as surrounding properties. You can even hire an independent surveyor at your cost (a few hundred pounds) to take out a survey on the property but even they may come to the same conclusion as the mortgage lender and mortgage lenders are known for not being too flexible with their decision making.
What happens if you get declined for a mortgage?
If you get declined for a mortgage this will usually be publicly available on your credit file and may temporarily reduce your credit score. You should avoid making any more credit applications as you run the risk of being denied further and damaging your credit score beyond repair in a suitable time for you to get a new mortgage and complete on your home purchase.
A mortgage could be withdrawn for a lot of reasons they include:
- You no longer meet the mortgage lenders requirement
- Your didnt complete your mortgage in the allowed timeframe
- You failed the mortgage lenders credit check
- You failed the mortgage lenders fraud checks
- You failed the mortgage lenders anti-money laundering check
- You failed the mortgage lenders sanctions list checks
- You have a financial association with someone who has a bad credit score
- The property you want to buy is worth far less than the sales price you have agreed
- You have bad credit (county court judgements (CCJ), bankruptcies, Individual voluntary agreements, debt relief orders etc)
If your mortgage offer was withdrawn because of bad credit, don’t be too worried. There are mortgage lenders who specialise in bad credit mortgage brokers but you will likely need mortgage advice from a bad credit mortgage broker.
How long does it take from valuation to mortgage offer?
A mortgage valuation will usually be carried out within 48 hours from when it was ordered and the mortgage lender will usually receive the results of the valuation within 5 days if it was an in-person valuation. In this case, a mortgage offer from the time of the valuation would take about 1 week.
If the mortgage valuation was carried out online then you could receive a mortgage offer within 24hours.
In any case, you should check your credit report from the credit bureau which the mortgage lender has informed you they used when making a decision before to declined your mortgage after a valuation. This could be Experian, Equifax or Transunion.
There are various reasons why your Natwest mortgage could be declined after a valuation.
Some of the most common reasons why a Natwest mortgage could be declined after a valuation have been mentioned above but typically a Natwest mortgage could be declined after valuation if you had a change of circumstances, you lost your job, the property is overpriced or similar.
A Halifax mortgage could also be declined after a valuation if Halifax find anything which they are not satisfied with. This could be that the property is overpriced and hence the loan to value rate given is inaccurate or maybe Halifax found a changein your circumstances that may affect your abilty to repay the Halifax mortgage.
Use a mortgage broker
Mortgage brokers have a lot of experience with dealing with borrowers whose mortgages have been declined after valuation or at any point.
If your mortgage has been declined after a mortgage valuation then you should avoid making any further mortgage applications this could potentially destroy your credit score.
You may prefer to look for a suitable mortgage broker.
You may want to consider using an independent mortgage broker to get a mortgage.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.
This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.
This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your mortgage is indeed a possibility before you make a full mortgage application.
Once you have found a home you want to buy and are satisfied with the mortgage offer for your mortgage then the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month.
It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.
Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.
They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.