Finding out that your home loan has been declined is never a good feeling, but don’t despair – all lenders are not created equal, and just because one bank has said “no deal” it doesn’t mean you should give up just yet.
 
If your mortgage application has been declined, don’t get disheartened, says Mark Walker, mortgage broker with YourShare.com.au, a home loans team that rebates their clients the trailing commissions paid to them each year from banks and lenders.
 
He recommends that you regroup all your documents and submit a new application. “All lenders are different and actually have quite different lending requirements,” he explains. “I know of a family who owned a millions of dollars worth of investment properties, but were declined by banks numerous times purely due to being self-employed. After a few applications with various banks, one particular lender took a closer look at their property portfolio and realised they were good for the money!”
 
Walker gives the following advice for those who are at the receiving end of a depressing loss on a loan.
 
1. Don’t give up
“The journey is never over until the keys to the right place are in your hand,” he says. “Always try again – there will be a lender out there that is matched to your needs and budget.”
 
2. Reality check
It is important to be realistic about your borrowing limits and to ensure that you are able to afford the monthly repayments. Find loan repayment calculators right here hereClick here.
 
3. Ask the lender why they declined your loan
“This is key in understanding what needs to be fixed for the next application,” Walker says.
 
4. Have a look at the credit card debt
If your problem is straightforward and you cannot get the loan due to credit limit restrictions of $1,500 or lower, this will be an easy fix. Regular income and savings are also important. Walker recommends that you clear the debt, reduce the limit of your card, and cancel the card altogether if you don’t use it.
 
5. Check your credit profile
“If you have a bad credit report you may not even know about it until your application has been rejected by the lender,” he says. “If your declined loan application was due to a credit default, then you’ll need to know that for next time and see if you can solve it or dispute it before applying again.” Check that the statements and bills you provide to the lender contain no arrears or overdue payments and if flaws are present, then make sure you are prepared with a good explanation.
 
What can be done next time to improve your chances of getting approved for a job?
  • Make sure all documentation is current. “Most recent payslips, not three months ago,” Walker says.
  • You should eliminate all credit card debt before you apply for another card.
  • Lenders can be made as easy as possible by providing payslips with income and overtime.
  • Check your credit file at websites such as www.mycreditfile.com.au and if there is something on there you did not expect, then see if you negotiate it to be removed or adjusted.
  • Going to a bank direct is more convenient than using a broker. “Brokers can negotiate with lenders for applicants and will be able to warn applicants upfront before they submit an application if there are any potential issues, to avoid being declined in the first place,” Walker says. “A broker can also source the best lender available in relation to your circumstances, and they know their way around the different lending criteria each lender has.”