There are many reasons why you may have had your home loan application rejected. It can happen even if you think you can afford the repayments and your finances are in good shape.
New credit legislation in Australia means that banks turn down applicants for seemingly insignificant reasons, and getting a home loan approved by the major banks has become much harder than ever before.
The reason your mortgage was declined will be unique to your specific situation, but here are a few common problems that may apply to you:
You may have bad credit and didn’t realise it.
Many different factors can affect your credit score. We see many customers who don’t realise their credit score is too low, and it can be as a result of a small mistake made years ago.
Thankfully, there are a few reputable lenders who don’t require you to have a good credit score to get a mortgage, but most of the major banks and lenders will not approve your loan if you have a bad credit score.
Even if you don’t think you have any reason to have a bad score, you may be surprised.
You may have late payments (even small ones) on your record
Having late payments will affect your loan eligibility – even if you have paid them off. It seems unfair, but the banks will view any late or missed payments as bad – regardless of their current status.
If you have late payments that still haven’t been paid, this will count against your application too.
You may have too many enquiries on your credit record
Applying for a loan too many times can, in some cases, affect your loan eligibility. That’s because some lenders keep track of the number of loans you’ve applied for, and too many applications and rejections will affect your current application negatively.
Change of Job or Employment Status
Depending on the type of loan you want, there are certain requirements for length of consistent employment.
If there are gaps in your employment history, or if you’ve recently changed career streams, you may find that this impacts your ability to get a loan approved.
You May Have Excess Debt
A common reason for having your home loan denied is outstanding debt.
If the banks decide that you have too much current debt you will be unable to get a loan, even if you’ve never missed a payment.
Loan Requirements or Lender Guideline Changes
Australian lenders have recently changed their guidelines. It means that people who would have been approved in the past are now getting rejected, even if their situation has not changed.
If you’ve had loans approved in the past but are unable to secure one in the present, it may be because there’s been a change in requirements that you’re unaware of.
Your mortgage application was denied. What next?
If your mortgage application was denied, don’t worry. The good news is that even if you have bad credit, there are reputable banks in Australia that do offer bad credit home loans and we can help you apply. Freedom Loans has helped thousands of people just like you.
First we find out exactly what’s causing your credit problems before we start your application, because it’s different for everyone. Once we’ve identified your specific problem, we choose the most appropriate lender from our specialist network: one who is the most lenient toward your specific problem.
We then compile and submit your application. These applications can be tricky to complete, so we do the work for you; making sure everything is perfect and ready for submission.
When we’ve completed your application and are ready to apply, we go through a credit manager we actually know personally. We’ve been doing this since 2003, so we’ve built good relationships with the right people. In some cases, we can even negotiate exceptions to their standard requirements.
As a result of these key steps, our clients hardly ever get declined. In fact, we’ve been able to secure loans for clients at interest rates lower than the bank they were originally declined from!
If you’d like us to help you get a home loan after you’ve been declined, contact us today.