Simply put, this means that even if you appear to meet a lender’s published rules, a real person still reviews the application and can decide whether or not they are comfortable lending to you.
This can be very frustrating, especially if you think everything is agreed upon. Mortgages actually have more checks than most types of financing, but the guarantor acts as the ultimate gatekeeper. Their discretion – or, in plain English, their judgment – can sometimes be the difference between a mortgage being approved or denied.
Can I file a complaint if my application was rejected due to the guarantor’s discretion?
In short: yes, possible.
Without getting too political about what happens behind the scenes in the mortgage world, some lenders talk about “underwriter discretion” as if it gives them a free pass to reject any case they want. no.
We have seen successful complaints where a lender denied an application, blamed “underwriter discretion,” and later removed the credit search from the customer’s credit file.
This is usually a very clear sign that the lender accepts that something went wrong – either by declining itself, or by allowing the application to get this far in the first place.
When is a complaint most likely to succeed?
There is no foolproof answer, but a useful question is: Did the lender reject the case because of new information, or because of information it already had?
Here are two simple examples.
The complaint is unlikely to be upheld: The underwriter finds something new that was not previously disclosed or available. For example, they discover another bank account, additional spending, dependents, gambling transactions, or anything else that changes the picture. In this case, the lender can usually argue that the decision has changed because new information has come to light.
The complaint is more likely to be upheld: The lender rejects the application because information it already knew when submitting the full application appears to fit its published criteria. For example, they already knew about your income, debts, credit file, deposits and affordability, but later they say that your debt-to-income ratio is too high or that your credit file is not good enough.
This is where a lender can find themselves in a difficult situation. If their system accepted the request based on the information they already had, it’s fair to wonder why that same information later became a reason for rejecting the request.
If my complaint is successful, will the lender change their mind and approve the mortgage?
In my experience, this is very, very rare. Lenders don’t like to be proven wrong, and they don’t always handle the matter with a great deal of dignity.
However, if you can prove that the reason they gave for saying “no” was factually incorrect, you may have seen decisions overturned. It completely depends on the reason for rejecting the application.
What can I do to reduce the chances of this happening?
Unfortunately, you can’t avoid it completely. Underwriters exist because lenders want human assurance for things their systems may not pick up. Sometimes that makes sense. Sometimes, it seems unbelievable when you’re the one on the receiving end.
This is where a broker can make a big difference. Yes, I know this is a biased answer coming from a broker, but it is still true. A good broker will know which lenders are likely to feel nervous about certain types of situations. They can also check your documents before you apply, not after the lender has already started reviewing everything.
This is important because, if there is a problem with the documents, it is best to find out before submitting the full application – not after you have done the credit search and everyone is stressed out.
If you are rejected due to “guarantor discretion”, try not to lose hope. I know that’s easier said than done. It can feel personal, unfair, and downright confusing, especially if you think your mortgage is on the right track.
But all lenders are different. We regularly help clients who have been turned down by one lender and then successfully place them with another lender. The key is to understand exactly why the first lender declined, so the same problem doesn’t happen again with the next application.
If you were denied due to Guarantor Discretion and want help figuring out what happened – and what your options are now – you can contact us below.
