Getting your home loan declined isn’t the end of the world

Getting your loan rejected is much more common today than it was a few years ago when I was getting a home.

In fact, it’s been reported that in 2018 4 in 10 home loans are being rejected by the banks. The reasons for this vary from the banks tightening their credit criteria to an increase in loan applications—but the fact is, you need to be more vigilant than ever to make sure your loan doesn’t get declined.

The most common reasons we see home loans declined are:

• ⛔️forgetting credit cards, interest-free loans or even small Afterpay accounts they haven’t used for a while.
• ⛔️changing jobs too frequently—if you have changed jobs multiple times in the past year, this is generally not seen as positive for the lenders.
• ⛔️changing addresses too frequently—again, if you have moved around lots in the past year without any good reason the lenders tend not to like this.
• ⛔️having messy banking situations—having five-plus banks and getting paid into multiple bank accounts, making it hard to track where you are getting paid.

To maximise the chances of getting your home loan approved:

1. Check your credit file—At Hunter Galloway we provide a free credit file check to our clients; this report shows all active (and closed) credit cards and loans to make sure this is covered on the loan application.
2. Double check any outstanding credit card limits—We use a service called BankStatements that will connect with your existing internet banking and provide up-to-date credit limits, again making sure no information is lost and maximising your chances of approval.
3. Clean up your bank accounts—Unfortunately, this is only something you can do; if you are paid into multiple bank accounts or have a bunch of different credit cards try to consolidate using a balance transfer, or simply close them down.

If your home loan does get declined, it’s not the end of the world. Lenders have different criteria that they use when deciding whether to approve or decline a loan. Being declined by one lender doesn’t mean they will all decline you.

If you’re working with a mortgage broker, they will usually reach out to you to discuss your other options if your loan has been declined.