For many Kazakhstani citizens, a mortgage is the only answer to the housing question. Having decided to take on a long-term financial burden...
... all that remains is to choose a bank with the most acceptable conditions and get its approval. And this is where the main obstacle to acquiring those square meters may arise—the bank may deny you.
With the assistance of JSC Nurbank, we have compiled a list of the most common reasons why a bank may decide against approving a mortgage loan application.
According to the financial organization, the main reasons for denial are:
1. Negative credit history
If your credo is "living on credit" and not paying your debts, don't be surprised if your next application gets denied. A poor credit history is the most likely reason for denial, and it's indisputable. After all, how can a bank make a deal with you if there's no confidence that you'll consistently make required payments to repay the loan?
It doesn't matter why or under what circumstances you ended up with a negative credit history. Bank officials don't care. The fact of non-payment speaks for itself. It should also be noted that a spouse's poor credit history can also influence the bank's commission decision when considering your mortgage.
Don't rush to rejoice if you have no credit history at all. In this case, the bank views you as a "wild card." It's unknown which side you'll land on: reliable borrowers or irresponsible debtors.
— The best scenario is if you've had loans that you paid off on time. This provides the bank with evidence of your reliable repayment capacity, — note Nurbank representatives.
A spouse's poor credit history can also influence the bank's commission decision regarding a mortgage for you.
2. Lack of pension contributions
If you can't provide a statement from your pension fund showing your regular pension contributions, you will be denied a mortgage. For Kazakhstani banks, the presence of pension contributions indicates stable income and confirms the borrower's income level. Consequently, this guarantees that the borrower can repay the mortgage, as this is a long-term commitment.
3. Exceeding family debt burden
Don't rush to rejoice if you have no credit history A large number of active loans is also a guaranteed reason for a denial. Informally, if a borrower has three or more loans, when applying for a mortgage loan, the financial institution will issue a negative decision. After all, no potential client can allocate all their income to repay loans.
— Before going to the bank for a mortgage, try to repay all debts from previous loans, — advise bank experts.
After identifying the top three reasons for bank denials, let's review the less popular reasons behind negative decisions.
4. Insufficient work period
Another document a bank will require from a potential borrower is proof of income for the last 6 months, which necessitates documentation of continuous employment for at least six months. Ideally, you should have this work duration at a single job.
5. Inability to confirm income
An income statement is also a document requested by banks when reviewing a mortgage loan application. Naturally, no financial institution will lend to a potential borrower who can't verify their income for the required amount. Usually, the inability to confirm official earnings is due to either under-the-table payment or unofficial employment.
— If your official salary is lower than actual, you can either explain the situation to your company's director and have them reflect your full earnings in the statement, or you can bring in a co-borrower who can verify their income with regular pension contributions. In such cases, the project can be considered if security is provided in the form of real estate, — suggest Nurbank representatives.
6. Job inconsistency
You may be suspected of unstable solvency if you constantly change jobs. For financiers, stability is more important than high incomes over one or two months.
If you've changed jobs frequently in recent years, there is a high likelihood of encountering issues when getting a mortgage. However, if you've worked 10-15 years at a single place with stable earnings, the lender will give a positive evaluation.
7. Insufficient down payment
Don't expect to secure a mortgage loan if one of the requirements is a down payment that you haven't saved. If you haven’t accumulated the necessary amount, you can bid farewell to your cherished dream. The bank needs guarantees of the client's solvency. No company wants to operate at a loss, especially a bank. So, first, save up the down payment, then approach the bank. If you lack time to save for the down payment, you can provide additional collateral, including third-party owned assets, as the down payment.
8. Criminal record
If you've had any dealings with the justice system, your "dark" past will be another reason for a bank's denial. By the way, no serious organization wants to employ or associate with someone who has had legal issues or a criminal record. A similar approach will be taken towards a chronic non-payer of alimony.
— Before gathering documents and applying for a loan, we recommend consulting with a bank employee to understand your real chances of mortgage approval, — suggest Nurbank experts.
9. Unpresentable appearance
Some might find this point trivial, but practice shows that a person's appearance can play a significant role in the bank's final decision. The saying "Clothes make the man..." applies here. Consider how a bank manager would react if a shabbily dressed potential borrower shows up, especially if they appear intoxicated. So, don't be surprised if even with an excellent credit history and proper documentation, your loan gets denied. Bank employees need to pay attention to every detail in a client's behavior.
— Every bank has its ideal borrower profile, and they aim to lend to those who best fit these standard parameters. Therefore, it's essential to study a specific bank's requirements for potential mortgage borrowers before visiting and prepare documents accordingly, — recommend JSC Nurbank.