5 reasons why a mortgage is not granted

A mortgage is the only way to buy a property

A mortgage is the only way to buy a property

Almost always the mortgage is the only way to buy a property, even if there are cases in which it could be difficult to obtain it.
Usually the main reason why the loan is not granted is related to the fact that the bank believes that there are not sufficient financial guarantees from the applicant, but there may also be other reasons related to the amount requested, to the financial history of the applicant of the loan, to the characteristics of the property you intend to purchase or to its value.
So let’s see what are the main reasons why a credit institution can decide not to grant a real estate loan.

Contents

  • 1 Reasons why a mortgage is refused: bad payers
  • 2 The amount requested is too high
  • 3 Unverifiable income from the reasons for rejecting the loan
  • 4 Reasons why a mortgage is refused: old age
  • 5 Property irregularities hamper the granting of the loan

Reasons why a mortgage is refused: bad payers

Reasons why a mortgage is refused: bad payers

Having a non-faultable credit history, and therefore being bad payers or protesters, is certainly one of the reasons why a mortgage may be refused. If, in fact, those requesting the loan have missed one or more installments of a loan, they are registered in the Eurisc bad register, which is regularly consulted by banks and credit institutions before granting any type of loan.

The amount requested is too high

The amount requested is too high

It can also happen that a mortgage is refused because you need too much money compared to the applicant’s financial resources and the risk of insolvency becomes too high. The monthly repayment installments, in fact, generally should not exceed one third of the salary received by the borrower, but other income is also assessed, such as rents or annuities, savings and lifestyle.

Incrementable income among the reasons for refusing the mortgage

Incrementable income among the reasons for refusing the mortgage

Among the reasons that push the bank to refuse a loan there is also an income of the applicant that is not constant or not demonstrable, which therefore does not provide the bank with sufficient guarantees for repayment of the installments. In this case, permanent workers have an advantage over precarious workers and atypical workers, although the latter can also access a mortgage, provided they meet certain parameters.

Reasons why a mortgage is refused: old age

Reasons why a mortgage is refused: old age

Even the applicant’s advanced age can be an obstacle to granting a loan. Usually the loan is not granted to people over 75 years of age, regardless of their income, because the risk of insolvency is considered too high by the credit institution.

Property irregularities hinder the granting of the loan

Property irregularities hinder the granting of the loan

There are also some features of the property that can affect the granting of a mortgage. Legal, cadastral or building irregularities concerning the property that you want to buy, for example, would make the possibility of reselling it very scarce, with a consequent loss of the bank if it was seized and sold by public auction. Furthermore, in the event of a foreclosure due to the insolvency of the borrower, the bank could also be reluctant to grant a loan as a guarantee given by a property donated by a deceased person who pays legal disputes that could arise for the heredity.
Finally, mortgages are generally not granted for properties of little value or which cannot be traded.

 

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