What Are the Most Typical Reasons a Mortgage Application May Be Unsuccessful

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Holo Team

2023-06-19T10:55:41.942Z


The process of securing a mortgage loan can often seem like a complicated dance between your financial situation, the property you're interested in, and the lending institution. At Holo, a UAE-based digital mortgage company, we understand the intricacies of this process and aim to simplify it for you. With our instant mortgage application feature and free advice, we strive to make your mortgage journey as seamless as possible.

However, not all mortgage applications are successful. Why is that? What factors lead to the denial of a mortgage application? In this article, we delve into the most common reasons that may result in a declined application for mortgage in UAE.

1. Low Credit Score

One of the first things a lender will look at is your credit score. This three-digit number is a measure of your creditworthiness and gives lenders an idea of how reliable you are when it comes to repaying loans. A low credit score can be a red flag for lenders and could lead to your mortgage application being denied.

2. Insufficient Income or Employment History

Lenders need to ensure that you can afford the mortgage loan repayments. Therefore, they will look at your income and employment history. If your income is deemed insufficient to cover the mortgage repayments, or if you have an unstable employment history, this could result in a denied application.

3. High Debt Burden Ration

Your debt burden ratio (DBR) is another critical factor. It's the percentage of your monthly gross income that goes towards paying your debts. Lenders usually prefer a DBR of 50% or lower. A high DBR indicates that you might have trouble managing additional monthly payments. In addition, you may wish to reduce the limit on your credit cards as lenders will take into consideration how much credit you have access to.

4. Property Value and Mortgage Amount

If the property's appraised value comes out lower than expected, it can impact the amount a lender is willing to lend. If either of these occurs at the valuation stage, it does not necessarily mean it's the end of your journey. Your Holo Mortgage Manager is on hand to walk you through your options.

5. Incomplete Application or Documentation

An incomplete application or missing documentation can lead to a denied application. The application for a mortgage in the UAE requires several documents to verify your identity, income, and credit history. Ensure you provide all necessary documentation promptly to avoid setbacks.

How Can Holo Help?

At Holo, we are more than a mortgage broker in UAE - we are your trusted mortgage agent. Our innovative platform guides you through the mortgage application process, helping you avoid common pitfalls that lead to denials.

To start, our online mortgage calculator in UAE gives you an estimate of what you can afford. This allows you to target properties within your budget and increases the likelihood of a successful mortgage application.

Our platform also provides a wealth of information through our mortgages FAQ, equipping you with the knowledge to make informed decisions. You can learn about various mortgage products, understand the importance of credit scores, and get guidance on the application process.

Conclusion

A denied mortgage application can be disheartening, but understanding the reasons behind it can help you avoid similar issues in the future. At Holo, we strive to make the mortgage application process less daunting. With our free and instant service, we are here to guide you every step of the way, ensuring you find the best mortgage deal in minutes. Start your mortgage journey with Holo today and secure the home of your dreams.