Applicants for mortgages are shocked to know that one in ten applications that fulfil all criteria for eligibility of loan is being rejected by lenders.

Nearly 9% of vetted mortgage applications have been rejected this year as compared to just 2.3% in 2007, even though all applications were meeting lender’s terms and conditions. Lenders found different reasons to reject them.

According to an agency spokesman, lenders have become too strict with mortgage criteria – even those applications where you would expect no hitch in acceptance are being flatly rejected.

Any blemishes in the credit history of an applicant can result in rejection. All debt repayments pertaining to store cards, credit cards, loans etc. have to be made on time. Details of defaults are held on borrower’s personal files for 6 years and count against him/her at the time of assessment of credit rating.

Assessing repayment capacity of borrower is the key for lenders. The most borrowers should expect is 4 times their salary, anything above this is not likely to be sanctioned.

According to a mortgage broker, lenders are too strict and getting a deal above 85% LTV is extremely difficult. Although they are advertising attractive rates on mortgages of 90% LTV, many borrowers fail to qualify despite good credit score.