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Can a mortgage be declined after an agreement in principle?

MORTGAGES | 21.09.2020

An Agreement In Principle (AIP) is a hugely important step when it comes to securing a mortgage and buying your new property. However, it’s also hugely important to note that it isn’t legally-binding, and therefore any lender can withdraw from an AIP or offer you an alternative amount or mortgage product.

It’s great to receive a mortgage Agreed in Principle, as it can mean you’ve gotten that but closer to getting your new home. Unfortunately, even after you’ve secured an AIP, there can still be a few reasons why your mortgage application may be declined. 

It’s different from a mortgage application

It’s important to understand that there are different checks that take place for an AIP and a full mortgage application. Because the two vary, this is why it can be possible to pass one and be declined on the other, even if the same lender offered you both. When it comes to an AIP, lenders will use their individual criteria while assassing you using a lending multiplier that’s applied to your income. This will also look at any outgoings too. However, with a full mortgage application, this information will be put under a microscope. And you’ll be subject to a much more thorough search of your Credit File, and if applicable checks with other Credit Reference Agencies.

Why was I declined?

If you do end up getting declined after an AIP, you might not be given a definitive reason why. This can be because it can simply just come down to a change in your personal circumstances. However, there are generally speaking a few key causes why your application is getting declined, including:
  • Recently changing your job can make it difficult for lenders to assess a consistent source of income for you.
  • Taking out a new line of credit as this will affect your affordability rating with lenders.
  • Not meeting specific lender criteria, as there’s always internal criteria a particular lender will have. 
  • Any significant change in your income or outgoings.
  • If you suddenly start missing payments and falling into arrears shortly before applying for a mortgage.
  • Discrepancies or inconsistencies with your application could mean you suddenly don’t meet the criteria.
  • Information held at a different Credit Reference Agency that wasn’t seen during AIP check, suddenly coming to light.
 

Don’t worry if you were declined after an agreement in principle

The important thing is not to worry if you end up getting declined after an AIP, as every lender is different, therefore getting declined by one mortgage provider doesn’t necessarily mean getting declined by others. Plus, getting declined doesn’t impact your Credit Score in a negative way. It’s also worth remembering that other lenders won’t be able to see whether or not you were declined, so it’s not likely to affect your ability to take out credit in the future. An AIP is no guarantee that you’ll be accepted for a mortgage, but it is an integral part of getting a mortgage accepted. If you’re still declined, this can actually provide you with some extra time to improve your Credit Report, and increase your chances of getting a mortgage when you apply again. If you really want to improve your chances of getting accepted for a mortgage - then get in touch with our expert mortgage broker team at TaylorMade today.    
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In the event that you wish to complain, you can contact us by email, telephone or letter.

Our address for this is:
Complaints Officer, TaylorMade Finance Ltd, 4 Church Road, Urmston, Manchester, M41 9BU. Our email address is info@taylormade-finance.co.uk and our telephone number is 0161 776 1089. We will then investigate the issues raised and inform you of our findings. Should you be unhappy with the resolution to your complaint you may contact the Financial Ombudsman Service, who can be contacted at the following address: Financial Ombudsman Service, Exchange Tower, London, E14 9SR.

Email: complaint.info@financial-ombudsman.org.uk
Phone: 0800 0234 567
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