There are many reasons why an application for a home loan can be declined and we’ve listed some of the most common ones below.
Home loan lending rules at banks can change
Changing conditions in the market can change a lenders credit policy which can sometimes mean the difference between being approved for a home loan or not.
If you’ve been turned down now it could just be related to the current financial climate which is tougher today than it was 6 – 12 months ago.
The boxes must be ticked
Lenders look for stability and one of the most important points is a regular income. This can be hard to achieve if self-employed or working at a number of different jobs. Many people in today’s market have multiple jobs and irregular earnings which is still outside the “traditional” box for many lenders.
A history of issues with credit
One of the most major reasons for a refusal on an application can be a person’s credit history. An automated scoring process is used by most of the conventional lenders which means a computer gives you a score based on your credit history. Your application may be declined due to your score not being high enough.
Requirements not being met in the paperwork
Not having the right paperwork is a sure way for your application to be declined or slowed at the very least. Things like your tax returns or you may not have had an opportunity to build up employment history yet.
Even if you have been discharged, filing for bankruptcy will be a red flag for many lenders.
Non-bank home loans – a different world
The good news is that the world has changed a lot over the past 20 years. There are now some big, well-established non-bank lenders that can offer you a different, much more personal approach to your home loan applications. We don’t mean any fly-by-night lenders, but big organisations, who have won awards for their work in alternative lending in Australia. They were set up specifically to help people with loans when the banks said ‘no’.
With non-bank lenders your application can be individually evaluated by an expert – called an underwriter – against their loan suitability and credit assessment measures, with each individual application being evaluated on its merits by a real person and not a computer.
So always check things out – because when it comes to home loan applications, if you’re short on paperwork, have a bit of an unusual income, if you’ve got a few credit history issues, or even defaults or judgements against your name, there may well be good alternative lenders that can still consider your application.
They will look at why you might have any gaps and use a really good range of factors to assess your needs, objectives and – importantly – your suitability for a loan in the situation you are in. That means they will be really responsible about the lending and make sure you can manage the repayments.
Getting turned down for a home loan can really knock your confidence. If it’s happened to you, don’t just accept it and wait years to have the courage to apply again. It’s always worth checking with us first.
If you’d like more information talk to us today about how we might be able to put you in touch with a lender that can help if your bank has said ‘no’ to your loan application.
At Find Your Mortgage we have all the resources you need to make an informed decision plus, we offer a free credit report and a free financial assessment without listing anything on your credit file. Give us a call today on 1300 469 667 or visit findyourmortgage.com.au, and find out how we can help you with property financing.
Disclaimer: Content is not intended to imply any recommendation about any financial product(s) or to constitute tax advice. If you need financial or tax advice you should consult a licensed financial or tax adviser. The information in the article is believed to be reliable at the time of distribution, but neither Bird and Young nor its accredited brokers warrant its completeness or accuracy. For information about whether a non-bank loan may be suitable for you, call us on 1300 469 667