So you have spent all that time compiling your income documents, inputting all your data, signing a whole bunch of forms, you press submit, then you get rejected! What a waste of time!
Some of the more common reasons for home loan application rejection include;
Not having the correct level of deposit
Every lender has different deposit requirements depending on the purpose of the loan, i.e. investment, owner-occupied, interest-only, principal and interest repayments.
Not having enough income to support the loan
Like above, every lender has different income requirements. For instance lender one may allow you to borrow $500,000, but lender two may only allow you to borrow $480,000. Credit policies vary between lenders, and it is important that you seek advice prior to deep diving into submitting applications, as this can impact your credit score over time.
Poor Spending Habits
Do you live paycheque to paycheque? Under responsible lending laws, lenders need to demonstrate your ability to service (afford) the loan. You need to ensure that you have evidence that you can afford the loan (bank statements showing regular savings plan, rental ledger etc).
Poor Credit Rating
Have you ever defaulted on a credit facility? Have you ever missed a utility bill? Lenders are paying close attention to your credit score. You can find your credit score online here, For a more detailed report, and access the credit reports lenders use, contact us.
Not having the correct supporting documents
Are you missing your payslips? Do you have evidence of your car loan payments? Under responsible lending laws, lenders need to demonstrate your ability to service (afford) the loan. Lenders can ask for further documentation to confirm your disclosed figures.
Incorrect information of your loan application
Did you overstate your living expenses? Enter your credit card limit incorrectly? Enter your employment details incorrectly? These are just some of the common mistakes we see on loan applications.
Navigating the complex lending environment we are in can be difficult. We take pride in offering simple advice and doing all the legwork for you! Contact us today if you have been declined on your recent home loan.