IMB Blog

My Bank Won’t Lend To Me. What Can I Do?

Banks want to lend money. But they want to see good account conduct and prove you can repay your commitments. It’s easy to get busy, not monitor your cash flow and end up with late payment and over drawn accounts.

Banks tend to be interested in certain types of lending and they have set criteria for deciding who can borrow money from them. It is very rare for a bank to offer any kind of loan to someone with credit that is not great, so it is not surprising that many people are turned down by banks. As daunting as it may be to get a rejection from the bank, here are some tips of what you can do to prevent of overturn the situation.

  1. Provide Clear and Accurate Information

If refinancing, most banks will want to see the last 12 month statements of your trading and loan accounts to confirm good conduct. In which case, it is worthwhile checking your actual credit report to make sure that it is accurate and that you are not being rejected by banks due to information that is either incorrect or out of date. You bank may be seeking clarification on several points: have you gone outside of your arrangements? Had you organised with your financer prior to it occurring? Have a read through your statements, are there regular monthly payments coming out which the Bank may seek further clarification on i.e. are they loan payments or insurance payments?

Have you had a default listed against you? If so, what where the circumstances and has it been paid. If it has been paid has this been updated through the credit bureau? Some businesses are quick to lodge a default but can be sow in updating to advise cleared.

  1. Prove That You Are a Safe Candidate

If you are a business owner, ideally you should have been in business for at least two years prior to looking for finance, so the bank can be comfortable with your trading figures. If you are a wage earner, pay slips and stable employment will often suffice for proof of income. Historical income is always requested.

Make sure that all tax obligations are up to date. Have a look at your financials and get an understanding of them. Ask yourself, would you lend money to someone with these figures? Then, write down your net income (after tax) and deduct your commitments, what is left is what you have for living expenses, is it enough?

Cash is important. However, banks will only take into consideration what goes through the books. Trading in cash may also generate problems when it comes time to sell your business. Potential purchasers would want to see financials by accountant to confirm profitability and value of the business.

  1. Consider Having a Mortgage Broker

If you are having troubles arranging a mortgage, you may be focusing on the wrong place. Consider having a mortgage broker. Mortgage brokers deal with all the top lenders and also some specialised situations. With the right broker, you will deal with a person that is working for your interest and not the lending’s one. He will arrange the right mortgage for you and your situation, getting the best rates at no cost to you. Who wouldn’t appreciate valuable free mortgage advice? If you are self-employed and need a mortgage, a broker will have lenders that specialise in these products.

If your problem is having little or no down payment, don’t panic, as the broker will have lenders available to qualify you for a house. They will also have lenders in case you have credit issues, and they will be able to get you a bad credit mortgage or if you just need to refinance or renew your mortgage, they will help you determine which option will save you the most money. This will undoubtedly increase your chances of being accepted for a mortgage.

The best part is that mortgage brokers offer these services at no cost, because a mortgage broker receives a commission from the lending institution that you sign your mortgage with. When you are making such an important life decision, it is a relief to know all the options that are available and be able to choose the one that is the best fit for you.

  1. Use a Home Equity Loan

When you are finding it difficult to borrow money from a bank, but own a home or have a mortgage, you could consider using a home equity loan. This is a type of secured loan, as it is secured against your property. Essentially, if you fail to keep up with repayments, your house could be sold to pay back the lender. Clearly, a serious possibility, so not a loan to be taken on without careful consideration of how sure you are that you can keep up with the payment amounts. If you know you can afford to repay such a loan, it is one of the best ways to access a large amount of money for almost any purpose at all.

  1. Use a Guarantor loan

The final option is a guarantor loan, which is an arrangement where you find someone else with good credit rating who is prepared to act as a guarantor for you. What this entails is that they need to sign up as part of the loan agreement to confirm that if you default on the payments they will then become responsible to pay the loan back.

In Conclusion

In order to save unnecessary delays in approval, be sure to tell the bank about all debts you have including loans you are a guarantor for. Be upfront and confirm every point. We hope these tips will help you land a loan from the bank and achieve the multiple dreams you have, from starting a business, to owning a home or going on a life-changing trip with your loved ones.

For more information and online mortgage advice, please visit Independent Mortgage Brokers. A Trustpilot rated “excellent” company.

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Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of our Independent Mortgage Brokers to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisers working for or with Independent Mortgage Brokers are fully qualified to provide mortgage advice and authorised and regulated by the Financial Conduct Authority. All our independent Mortgage Brokers will offer advice specific to you and your needs and circumstances. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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