Mortgage Rejected by NatWest: What Should I Do?

Let’s be honest: being told that your mortgage application has been declined by NatWest is incredibly disappointing, and what makes this situation even worse is not having an explanation as to why…

Today, many applications are refused due to the strict criteria and restrictions that popular high-street banks and lenders will follow. Whether it’s your first time applying for a mortgage, or you’ve been through the process before, the important thing to remember is that this is not the end of your home-buying journey.

In this guide, we explore the reasons why NatWest might have refused your mortgage, what high-street lenders will be looking for, and what action you can take to improve your chances of success in the future. Let’s jump in.

Why Did NatWest Refuse My Mortgage Application?

Crucially, NatWest will not refuse a mortgage application for no reason. Instead, there are a variety of reasons why NatWest may refuse a mortgage application.

Common reasons for a mortgage application refusal will include a low credit score, insufficient income, employment stability, or failure to meet NatWest’s affordability checks.

For those who are looking for a self-employed mortgage, it’s important to note that NatWest will require proof of income over two years. Failure to provide a reliable proof of income with a self-employed status will likely lead to a mortgage application being declined.

Understanding NatWest’s lending criteria can help you narrow down the specific reason for your refusal is key to addressing the issue and improving your chances in the future.

What Are the Common Reasons for My Mortgage Application Being Rejected?

If you’ve just been declined a mortgage application, then you’re most probably feeling confused and disheartened – but don’t worry.

In this section, we’ll take a look at the most common reasons for a mortgage rejection, so you can start to see where you might improve for your next application.

Credit History Problems

Your credit history can play a massive role in how mortgage lenders – especially popular high-street lenders – will view your application.

In the simplest terms,  your credit score will demonstrate how reliable you are at managing finances, including the history of how you’ve previously paid off loans, credit cards, and bills. This will also provide lenders with an insight into any ongoing loans that you are currently managing.

Bad credit that has been accumulated through missed payments or high levels of debt on your record, will signal to the lenders that you might be a high-risk borrower. As one of the largest UK banks and mortgage lenders in the UK, NatWest will likely refuse any mortgage application that demonstrates an incredibly bad credit report.

If your credit score is low, there are steps that you can take to improve it.

Start by checking your credit report to make sure there are no errors. You can use a main credit reference agency such as Experian, Equifax, or TransUnion for a complete credit report.

Should you discover any issues, make a concerted effort to try and pay off any outstanding debts and avoid taking on new debt if possible. Over time, these actions will naturally help raise your credit score and make you a more attractive candidate to lenders.

It’s important to note that different lenders will use different methods to calculate your credit scores, and so you may find that improving your credit might have a greater effect with one lender than another.

Did Not Pass NatWest’s Affordability Check

When you apply for a mortgage, NatWest will want to know that you can afford the monthly repayments. This is true of any lender.

As such, they will look at your income, expenses, and debts to ensure that you won’t be financially stretched or that you are asking for more money than you could practically afford to repay. If you don’t pass their affordability check, your application will be rejected.

Though the affordability checks can sound slightly complicated and convoluted, it is simply a method of making sure that your income is enough to cover your living costs along with the new mortgage payments.

There are free online tools, such as mortgage calculators, that are available to help you find out how much you can borrow and will help you assess if your mortgage application is inline with NatWest’s affordability calculations.

If you’re self-employed, lenders will typically want to see your last two years of income before they approve an application. This is because of the nature of self-employed work and its correlating fluctuating incomes. A two year period allows lenders to draw up an average expected income to ensure that your earnings are stable enough to afford the loan.

Keep in mind that affordability checks can assess more than just your basic salary. Some lenders will assess additional income channels including bonuses, commission, rental income, and other forms of financial support.

Employment Stability

Stable employment can be the cornerstone of any mortgage application. Lenders like NatWest want to see that you have a steady and reliable income. If you’ve recently changed jobs or you’re self-employed, this might raise concerns about your ability to make consistent mortgage repayments.

As we’ve previously noted, for those who are self-employed, NatWest will require at least two years’ worth of income records to assess your financial stability. Because of this, if you’re still in the early stages of your self-employment journey, you will either have to wait or rethink your chosen lender.

Fundamentally,  lenders like NatWest need reassurance that your job is secure. If you’re in a temporary position or have recently switched industries, this could cause your application to be rejected.

Job stability is one of the biggest factors that lenders will look to assess, to ensure that you can continue making your mortgage payments without interruption.

Strict Age Guidelines

If you’re an older borrower, it’s important to note that Age will also impact your mortgage application. Specifically, NatWest have set out the following criteria regarding age; you must be able to repay your mortgage in full by the time you are:

• 70 years of age for a residential interest only mortgage
• 75 years of age for a capital and interest mortgage
• 80 years of age for a buy to let mortgage

As a general rule, lenders will be more concerned with older borrowers regarding the number of years left in their working life to secure a reliable income and ability to keep up with monthly mortgage payments after retirement.
If you’re an older borrower and are looking to secure a mortgage, there are other specialist lenders who may be more flexible.
With that being said, as long as you fit the criteria set out, NatWest may still offer mortgages to older borrowers. Typically, they will ask for more detailed financial planning to ensure your retirement income can cover the mortgage payments.

Are NatWest Strict When It Comes to Lending?

As one of the most popular high-street lenders in the UK, Natwest can be seen as a strict lender.

NatWest, like most banks, have made their lending criteria to accommodate the majority of borrowers while ensuring that their specific borrowers can afford to repay their mortgages. While their lending criteria is designed to help protect you from taking on more debt than you can manage, it does not offer the same flexibility as other specialist lenders.

However, it’s important to know that strict doesn’t always mean impossible. Some people face multiple rejections before they find a lender that’s the right fit for them. If NatWest’s requirements seem too rigid for your situation, a mortgage broker can help you explore other options and find a lender that may be more flexible.

Specifically, popular high-street banks – like NatWest – may not offer mortgages to those with unique occupations, income channels, or those who simply cannot fit into the demographic of the ‘majority’ of borrowers. One such example of this could be a starting self-employed borrower who is without a long history.

Working with a trusted mortgage broker can help you explore your options beyond NatWest, and help you find other lenders who may offer better terms or be more lenient about the specific reasons for your rejection.

What Should I Do After Being Rejected by NatWest?

If your mortgage application was refused by NatWest, try not to feel discouraged. In reality, NatWest and other popular high-street lenders will have to refuse a multitude of applications everyday – and this can be for a variety of different reasons.

The most important thing is to understand the reasons behind your mortgage application being rejected, and fixing any problems that could impact your next application. Here’s what you can do next:

1. Remember, this is not the end: A mortgage rejection doesn’t reflect poorly on you. Many face rejections, especially if they’re applying for a mortgage for the first time. It’s simply a part of the process of finding a mortgage that is best for you.
2. Understand the Reason for Rejection: NatWest should provide you with a reason(s) for your specific rejection. This will help you understand what you will need to improve on before your next application.
3. Check Your Credit: Specifically, if your credit score was a factor in your mortgage rejection, make sure to check your credit report. Make sure it’s accurate and start to take steps to improve your overall score.
4. Improve Your Financial Profile: Try reducing any debts and work on improving your savings. Simply saving for a few extra months for a bigger deposit can massively help with your affordability, and may make you a stronger candidate for future applications.
5. Contact a Trusted Mortgage Broker: By working with a trusted mortgage broker, you will be able to access expert guidance and help on finding the right lender for your unique situation. In addition, brokers can help you understand all your mortgage options and show you how to bolster your mortgage application.

Can I Appeal Against NatWest’s Mortgage Refusal Decision?

While it’s possible to appeal a NatWest mortgage decision, it’s important to note that an appeal is not always successful.

There is often a specific reason for a mortgage refusal, and so it is best practice to first review and understand the reasons behind any declined mortgage application. However, if you believe there was an error in NatWest’s assessment, you can contact them for a review.

With that being said, if your financial profile hasn’t changed, it may be more productive to focus on improving on the potential reasons that led to the refusal. As mentioned above, this would include reviewing and improving your credit score or affordability.

Get in Touch with a Mortgage Broker After a Mortgage Rejection

A mortgage declined by NatWest can feel like a major setback, but it does not mean your dream home or mortgage is now out of reach.
If you’re feeling overwhelmed or uncertain about your next steps, contacting a trusted mortgage broker can make a world of difference.

A qualified and trusted mortgage broker – like Boon Brokers – can help provide you with a complete understanding of your current situation and the best next steps, tailored to your requirements and goals.

With whole-of-market access, we can find and compare the most competitive mortgage offers that are on the market today. Whether that’s with NatWest or a different specialist lender, we’ll take care of your next mortgage application and make sure that you get the perfect mortgage for you – completely fee-free.

Contact Boon Brokers today – our expert mortgage advisors are waiting to guide you through your mortgage journey and to find you the lender that matches your needs.