It is not unusual for contractors to have their mortgage application declined when approaching a lender directly. Lenders often have a lack of understanding around the innovative ways contractors are paid, and the longevity of their income. They often ask for documentation that is near on impossible to obtain, and it is common for them to believe the borrowing amount requested is unaffordable. If any of the above sound familiar, it is important to remember that there are alternative ways to secure mortgage funding.
First things first, establish where it all went wrong. Speak to your estate agent and explain what has happened, this will relieve any pressure between the two of you, and they will be able to give a good indication whether the vendor is willing to persist with you as the preferred buyer.
Once you have established this, it is time to employ someone who understands your world. A contractor mortgage specialist will have a thorough understanding of the contractor space and will ensure the chosen lender understands your work status before making a full application. By having the lender assess your application correctly, minimises the risk of a declined application.
Preventing a declined application in the first instance is obviously preferred. Chasing the best rates is great if they come off, but if that lender does not fully understand your situation the risk is not worth it. The economics of lending and profit mean the ones with the best rates will also be the most risk averse. Unfortunately, contractors have long carried an unfair perception of risk amongst many lenders, but the contractor still holds the cards by choosing who to entrust with arranging their mortgage.