Underwriting a loan: this is the process a company, usually a bank/lender or insurer takes on the calculate the risk of the loan or the insurance policy.
Back in Time…..
Many moons ago, getting a mortgage was a complicated and complex procedure.
You applied for the loan, provided the required documents, wage slips, bank statements, letters of reference, and you waited…..and waited….and waited some more. In some instances it could take 60 days to get a mortgage approved.
Much of this was due to the fact we had to wait on the post.
Enter a New Realm of Mischief, the Internet and emails, and suddenly, a mortgage can be approved in a matter of hours, and conditioned on certain proofs; such as income, credit score, deposit, etc.
However, with this New Realm of Mischief, comes even more issues to deal with, such as Social Media, who we associate with, and the fact that all this is accessible by a bank or lender, to know more about us.
Think of getting a mortgage in a few ways:
- It in all probability is the largest loan you will ever take out.
- It is also the longest term of a loan you may take out, 10 years or more.
- The lender needs to take a quick photo of you now, and project that in the future for those 10 plus years.
The lender has to predict that in the future you will continue to pay the loan.
What Are These Mistakes We Could Make to Have a Mortgage Loan Denied?
These mistakes in themselves, may not make a mortgage lender deny or reject your loan, but they can cause the lender to look at it closer. The underwriting process could take longer, and be more involved.
Oddly enough, we can be judged or looked at by the friends we keep, and what better way to know who we keep friends with than through social media.
Social Credit Reports are here, and while they may not be used to extent in the UK as they are in other countries, it is only a matter of time.
Lenders, and employers, are searching and reviewing our social media accounts more and more to get a picture of who we are, and if they want to do business with us.
You and your mates go out on the tiles, you owe someone some money for the evening and so you innocently transfer the money to them, and include a joke reference (insert joke here).
When the mortgage company reviews your accounts, it is possible they will see the transfer, and the joke reference.
It may not come across as a joke to them. It may cause them to raise a flag and ask additional questions, slowing down your mortgage application.
Keep transfer references to the point.
This also ties in with giving/transferring money as a gift.
Gifts are fine, but gifting someone £100 or more when you are applying for a large loan such as a mortgage, is not a good idea.
Large Cash Withdraws
This a huge red flag to lenders.
Why did you withdraw £100, or more in cash on such and such a date?
Why do you consistently withdraw £(insert amount here), every weekend in cash?
I think you know where I am going here, and where a lender may be looking.
This ties in with the cash withdraws, but also there are those that gamble using their bank cards or credit cards.
Red flag again!
Gambling is not a crime, nor is it an issue if you can afford to play and keep it within certain limits. But it is something that can cause a lender to look further into your finances, and could delay your mortgage application.
Is this list inclusive or exhaustive as to what could delay a mortgage application, or worse yet, have an application denied?
But you may wish to keep these things in mind, and not just for applying for a mortgage loan, but in other aspects of our lives.
Big Brother is watching…..