The most common reason lenders decline equity release loans centres around the value of the property, data from More2life shows.  

The later life lender finds that the top reason behind turned down borrowing applications was when the value of the property failed to meet minimum/maximum value criteria, or the borrower wanted to release a higher loan-to-value than was possible.   

This is particularly true of potential customers looking to rebroke, or looking for further advances based on estimated rather than confirmed property values, says its study covering the first quarter of the year.  

Problems around property valuations lead its top five reasons for refused later life loans, followed by homes that were flood risks in second place.  

Homes that were close to commercial properties were third, houses that needed significant repairs in fourth, followed by single-skin construction dwellings.  

The lender points out that a year ago commercial property proximity was the leading reason for refused later life applications (now third), while problems around value lifted to first from fifth spot. The rest of the top five is unchanged.  

It says: “The recent uncertainty in the property market will no doubt have played a role in some of the more cautious underwriting decisions around long-term sustained value and the impact the proximity to commercial property may have.    

“This view is backed up by the rise in the number of properties which are declined as there is a perception that it will ‘perform worse’ than other similar homes – due either to location or a combination of factors such as layout, poor state of repair or lack of planning regulations.”  

Looking beneath the top five over the last five years, the study shows that lenders are more open to discussing flat roofs, which dropped out of the top ten most common refusals from the second most common reason in 2019.  

Problems around spray foam, structural issues and ex-local authority properties also dropped out of the top ten in this quarter, from fourth, fifth and sixth spot, respectively, in the same period in 2019.   

More2life managing director Ben Waugh says: “No provider likes to say no and by highlighting the impact issues such as clutter, flood risk and proximity to commercial property can have on an application, advisers will be able to have more open conversations with clients and ultimately choose a lender who is happy to say yes.”