08 Sep 5 Reasons Your Home Loan Application Might Get Declined
One of the most frustrating things that can happen to a home buyer is to get rejected when you apply for a loan.
Not only is it likely that you’ve been looking for a home for some time, but it might even feel like you’re further away from your investment or homeownership goals than ever before.
Fortunately, by speaking to a mortgage broker in Melbourne, this is an easy situation to rectify.
Firstly, there are a few reasons why your home loan application might be rejected.
Borrowing too much
One of the reasons you might get rejected with your loan application is that you are trying to borrow too much.
Banks like to see that you have a decent deposit with most happy to lend to an 80LVR. When that number starts to get higher, you are at a far greater chance of getting rejected.
Fortunately, there are a number of things you can do if you can’t put up a big deposit. You can get a guarantor loan, which would allow you to borrow up to 100% or if that’s not possible then you could also consider using a program such as the Frist Home Loan Deposit Scheme, which means you might only need 5% in genuine savings.
Speaking to a mortgage broker in Melbourne is often the fastest way to see how you can get a loan with only a small deposit.
Lenders like to see consistent and steady employment before they lend any money to you. Generally, that means at least six months in the same job.
Unfortunately, these days it is increasingly common for people to work casual or contract jobs or even be self-employed.
Different lenders work with different types of borrowers, which is why it is critical for you to connect with the right bank. That’s where a mortgage broker in Melbourne can help.
Spending too Much
If you can’t manage your money and save a bank will assume you won’t be a good candidate to repay a loan.
What’s even more important is that you don’t have a large amount of debt from things like car loans and credit cards. These types of debts often come with high interest rates and aren’t looked upon all that favourably by lenders and are one of the key reasons you might get your application rejected.
If you’ve had money troubles in the past, that might well be reflected in your credit score.
Bad credit is generally a red flag to a lender and that could be a reason you will get rejected. If you have applied for multiple loans and keep getting rejected, that will also show up on your credit file and it makes it all the harder to get a loan.
Your mortgage broker in Melbourne can quickly identify what your credit file looks like and how it will be viewed by the banks when you go to apply for a loan.
Buying an Unusual Property
Lenders like to lend money for properties that they could sell easily in the event they had to because you couldn’t pay your mortgage.
For that reason, there are some properties that banks don’t really like all that much. Very small apartments are often unpopular with lenders as well as things like holiday homes or rural properties.
Lenders even have lists of suburbs where they are not keen to lend, either because they are currently overexposed to properties in that area, or they feel property values in those areas are at risk.
The best way to make sure you won’t get rejected by a bank when you apply for a loan is to get pre-approved beforehand.
If you’re looking to get finance in the coming months then get in touch with us and we can quickly assess your situation and let you know what the chances are that you’ll be able to get your finance approved. Please call on 0488 814 148 and we will be happy to help.