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Rejected by Your Bank? Mortgage Options You Need to Know

Rejected by Your Bank? Mortgage Options You Need to Know


Home ownership is a personal and financial goal for many people, but sometimes it can feel out of reach, especially if you’ve been dealt a rejected mortgage application by your bank. While you may think this rejection is the end of the road for you, there are steps you can take to move forward in your pursuit of home ownership that can have very positive results!

If you’ve had your mortgage application turned down by your bank, don’t give up. I’ve outlined some key considerations that will help you better understand the process and how to move closer to buying your next home:

  1. Assess the situation

Be sure to find out from your bank exactly why they denied your application so you can better assess your situation. In most cases, it’s one of the following reasons:

  • Low income – your income may not be enough to fully cover your new mortgage, taxes and utilities on top of daily living costs and other expenses or debt you may have.
  • Proof of income – for anyone who is self-employed or does contract work for example, the lack of a steady income can be a liability when it comes to getting approved for a mortgage.
  • Poor credit – if you have a history of not paying or missing car payments, bills, credit cards and other loans, then your bank may feel that you are too high of a risk for a mortgage.
  • No credit – if you don’t have a borrowing history, you’re new to the country, or you’ve never had a credit card for example, then a bank can’t determine if you are a high or low risk and may reject your application because they don’t have enough information about your ability to pay back a mortgage.

Once you understand why your application was rejected, the good news is that you can then take steps to remedy the situation so that your chances are improved the next time around.

  1. Improve your odds

The first thing to do if your application was denied is to start a financial plan of action. Depending on the reasons why you were rejected, your plan might include:

  • Getting a higher paying job, reducing debt, and/or finding strategic ways to save money to improve your debt-to-income ratio.
  • Looking for a more affordable home that’s more within your price range.
  • Improving your credit score by paying off debt, making all payments on time and making sure your credit report is accurate.
  • If you have no credit rating, you can start by getting a credit card and paying it off in full each month, as well as having some bills or other finances in your name that can build your credit.
  • Consider a co-signer who can apply with you – as long as they recognize that they are on the hook for your mortgage if you are unable to pay it.
  • For self-employed individuals, you can work with a bookkeeper or accountant who can set you up with a business plan that includes a steady income or ‘paycheque’ system, or what more accurately shows your assets/collateral.
  • Wait it out – perhaps you just need a bit more time to save up and find the right time to re-apply down the road when you are financially ready.
  1. Talk to a mortgage broker

If your application for a mortgage is denied, you can always talk to a certified mortgage broker who can work with you to look at your options. Your mortgage broker works with a variety of lenders with whom they have a close business relationship. It may be that there is a lender who has different application requirements who is ready to give you the mortgage you’ve been waiting for.  Also, don’t worry that you’ve already have been turned down, it won’t negatively impact your future attempts for financing.

If you’ve been dreaming of buying a home, condo or recreation property but your bank turned you down, don’t let it get you down; you still have options! Be sure to connect with me, Darren Robinson. As a certified, experienced, and highly reputable mortgage broker in Barrie, I’ll work with you to help you build a plan of action to get you closer to owning that home. To find out more, book an appointment with me by calling 705-315-0516 – I look forward to working with you.

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