Mortgages can be declined at any stage before confirmation, even after the lender has issued an Agreement in Principle (AIP).
An AIP is a proposed deal between the borrower and the lender that specifies the amount they will allow you to borrow and the associated terms.
While AIPs usually convert to agreements without any problems, some AIPs are rejected at this stage.
If your mortgage has been declined after an AIP, this is the guide you need to know why and what to do next.
Table of Contents
- Mortgage Declined After Agreement in Principle: What To Do Next?
- Reasons for Mortgage Rejection After Agreement in Principle
- Some Common Mistakes On Mortgage Applications That Might Lead To Rejection
- Frequently Asked Questions (FAQs)
- 1. How common is it for a mortgage application to be declined after AIP?
- 2. Does a mortgage decline after an AIP negatively impact credit score?
- 3. Is it mandatory for lenders to provide detailed reasons for declining the mortgage application after an AIP?
- 4. Is it possible to appeal against a mortgage decline after AIP?
Mortgage Declined After Agreement in Principle: What To Do Next?
Since an AIP is not a final decision but rather a proposed one, there are multiple reasons why your application might be declined at this stage.
This can include property valuation issues, credit rating concerns or even affordability problems.
To address such rejections, you need to understand why your application was declined and seek professional advice for remediation. In general, the following are some of the steps that you can take.
1. Refrain From Immediate Reapplication
Immediately reapplying for a mortgage after a rejection can negatively impact your prospects.
As mentioned before, there can be multiple reasons why the lender has rejected your application even after an AIP, and unless you correct those problems, they can prove a hindrance in your mortgage process again.
Also, repeated applications and rejections in a short period can harm your credit score. So, it’s best to stop and detect why your application was declined in the first place. Once you’ve corrected those problems, you can go ahead with a reapplication.
If you still can’t understand why your application was rejected even after detailed scrutiny, proceed to the next step below.
2. Connect With A Mortgage Broker
A mortgage broker is an experienced professional with specific expertise in mortgages and can help you navigate why your application was rejected and how to get it back on track.
However, remember that not all mortgage brokers are equal, so make sure you choose one with experience in mortgages that have been declined after AIP.
Besides their specialised knowledge in reactivating mortgage applications rejected at the AIP stage, brokers have contacts with other lenders who can offer you better deals.
They can even help you with documentation to ensure no repeat application rejection.
You can use this link to connect with an experience UK mortgage advisor today and discuss your situation further.
Reasons for Mortgage Rejection After Agreement in Principle
Now, let’s examine why a mortgage might be rejected after AIP. There can be multiple reasons, some of which are explained below.
1. Final Credit Check Problems
Even after the AIP, lenders might undertake a detailed credit check to ensure that your credit history is suitable for the mortgage to go through. They might reject your application if they find any discrepancies or bad credit that went unnoticed during previous checks.
2. Decline In Financial Situation
In case of any adverse changes in your financial situation, such as job loss, increased expenses or bad credit after the AIP, the lender can reject your application. Even a decrease in your total earnings can result in a rejection.
3. Application Errors
Discrepancies in your application, such as errors, misinformation or missing information, can also result in a rejection. Mortgage brokers can help you understand these problems and correct them where needed.
4. Fraud Suspicion
If the lender detects or even suspects that fraud is occurring at any application stage, they can cancel it. This suspicion might be genuine or a false alarm due to something as simple as inconsistent details on your application, but the lender might cancel anyway.
5. Changed Lending Criteria
The mortgage process can take weeks to complete, and the lender’s criteria might change due to internal policy changes or regulatory processes.
As a result, by the time the AIP is issued, you might no longer meet all of the lender’s criteria, and the application might be rejected.
These are some of the most common reasons why a mortgage might be declined after an AIP, and there might be reasons beyond these why your application is rejected.
A professional mortgage broker can help you in such a situation and open the doors for renegotiation.
Some Common Mistakes On Mortgage Applications That Might Lead To Rejection
We’ve already mentioned that even a simple mistake in your mortgage application can cause concern for the lender.
Here are some of the common errors in mortgage applications that might lead to a rejection:
- Wrong or misleading financial information
- Nondisclosure of all existing debts
- Incorrect employment details
- False asset information
- Out-of-date credit reports
Frequently Asked Questions (FAQs)
1. How common is it for a mortgage application to be declined after AIP?
Technically speaking, the lender can call off the mortgage at any stage before confirmation, even at the AIP stage. While reaching the AIP means you have a reasonably good chance of getting final approval, it isn’t guaranteed.
It all depends on the complexity and correctness of your application. You should get approval if you’ve done everything flawlessly and have no complications. For complex applications, the lender might scrutinise everything even after the AIP.
2. Does a mortgage decline after an AIP negatively impact credit score?
No, it doesn’t impact your credit score or harm your chances for future approval. Since lenders usually don’t perform hard credit checks while assessing for an AIP, it won’t be recorded.
3. Is it mandatory for lenders to provide detailed reasons for declining the mortgage application after an AIP?
Legally, no. Lenders aren’t required to provide the reasons for the rejection, but they might supply the necessary details to your broker, especially if you’re working with a lender they know. This will allow you to understand what went wrong and correct the problems.
4. Is it possible to appeal against a mortgage decline after AIP?
Yes, it is possible, but it depends heavily on the lender’s policies. The first step should be to contact the lender, understand what went wrong, and take it from there.
I am CeMAP & CERER qualified mortgage adviser and have helped a number of clients realise their dreams when they thought it would not be possible. I’m skilled at getting mortgages sorted for people with a history of missed payments, CCJs, defaults, debt management programmes, IVAs and bankruptcies.