Home loan rejection reason #1 – Questionable credit history
Lenders now have access to a lot more information about you as a borrower. With the advent of comprehensive credit reporting in 2019, the recording of customers’ both positive and negative credit histories is now the default for Australia’s big four banks. Likewise, other big lenders will most likely follow suit later this year. Under this new scheme potential lenders can now get a bird’s eye view into your personal credit history.
However, if your credit history is less than sterling, all is not lost. We recommend firstly that you check your credit report. At the end of the day, this is what the lender sees, so it’s important to understand any possible areas of concern. Furthermore, some borrowers actually have credit reports that are in error. Therefore, it’s important to validate their accuracy. Once this is ticked off, it’s time to start paying down any and all lines of credit where possible. The more you can free up debt, the greater your credit score and the more receptive will your borrower be.
Home loan rejection reason #2 – Not enough cash flow
If you are unable to show lenders ‘genuine savings’ then it is highly likely that your home loan application will get rejected. However, a healthy lump sum of savings in your bank accounts informs lenders that you have what it takes to make home loan repayments based on your current incomings and outgoings.
There are several ways to demonstrate you have ‘genuine savings’, including:
Making regular deposits into your savings account over a 6 month period.
A term deposit savings account
Making extra repayments into your car or personal loan
Voluntary contributions into your super fund as part of the First Home Super Saver scheme
The best bit of advice here is to create a budget that will help you save for a home deposit. And then stick to it. Otherwise, if your deposit doesn’t quite meet the 20% required, you will most likely have to pay Lenders Mortgage Insurance (LMI).
Home loan rejection reason #3 – Employment stability
Lenders might reject your home loan application if they believe your employment status isn’t so stable. Indeed, if you haven’t been in your current job long enough you may face some problems getting approved. And if you are currently unemployed your application will certainly not be approved.
Self-employed borrowers also facing their own set of obstacles. Since the banking royal commission, lenders are less inclined to approve home loans unless secure employment and consistent revenue stream is provable. That said, from its beginning, Organic Home Loans was created to help self-employed borrowers and property investors secure the right home loan for their particular circumstances.
And there is more good news. At Organic Home Loans we understand that getting your home loan approved is all about finding the perfect lender for you. Our team of experienced mortgage brokers are passionate about helping self-employed workers and property investors into their new dream home. At Organic Home Loans, we understand what the tightened lending standards mean for you. And we go out of our way to find a lender that will work for your specific circumstances.
Why not talk to us today so we can help you secure your dream home and begin building your financial future? There is no time like the present to get your finances in order.
