Attention Brisbane first home buyers! Have you had one too many home loan application rejections?
Don’t worry, you’re not alone. Many people face the same dilemma and are left wondering what to do next.
In this blog, we’ll guide you through the reasons why you may have gotten your home loan application rejected. We’ll also provide you with practical steps you can take to increase your chances of success in the future.
Whether you’re a first-time home buyer or looking to refinance, we’ve got you covered.
I need a loan but keep getting declined
Did you get your application for a home loan declined after preapproval? Or was your loan declined after unconditional approval?
Here are some common reasons why you may have had your Brisbane home loan application rejected by lenders:
- Low to zero credit score
- High debt-to-income ratio
- Insufficient income
- Unstable employment history
- Lack of savings or deposit
- Limited credit history
- Poor choice of property type or location
- Documentation issues
I got my application for a home loan declined when can I apply again?
It is generally recommended to wait at least six months before reapplying for a home loan after a rejection. This gives you time to improve your financial situation and address any issues that may have led to the rejection in the first place. But it does depend on why you were declined in the first place.
What are the lender’s legal obligations if they decline an application?
If a lender declines an application for a home loan in Australia, they have certain legal obligations under the National Consumer Credit Protection Act 2009 (NCCP Act) and the Privacy Act 1988.
- If a borrower requests for it, the lender must give the borrower a written copy of the first check or the final check the lender made about their loan request. This rule stays in place for 7 years, but only if:
- the lender provides credit assistance; or
- if the borrower enters into a contract with the lender.
- The borrower has the right to dispute the decision if they believe it was made based on incorrect information. They can file a complaint through the Australian Financial Complaints Authority (AFCA).
What to do if you get your home loan application rejected
There are a number of things a borrower can do when their home loan application is rejected:
- Review your credit score and credit report
One of the first things you should do is obtain a copy of your credit report and score. This will give you an idea of where you stand in terms of your creditworthiness. If there are any errors or negative items on your report, take steps to correct them.
If your credit score is low, there are a number of things you can do to improve it. Paying your bills on time, maintaining a good credit history, and keeping your credit balances low will all help to improve your score.
- Save up for a larger deposit
If you can afford it, try saving up for a larger deposit. A larger deposit shows the lender that you have the financial capability to save and make a significant investment in the property. It also reduces the loan amount you need to borrow.
- Get pre-approved for a loan
Before you start shopping for a home, get pre-approved for a loan. This can help you secure a loan quicker by demonstrating to real estate agents and sellers that you are a serious and qualified buyer.
With a pre-approval, the lender has already conducted a preliminary assessment of your financial situation. So when you find a property you want to purchase, the loan approval process can be quicker.
You also get to demonstrate to real estate agents and sellers that you are a serious and qualified buyer. This can increase your credibility and improve your chances of securing the property.
- Find a guarantor
If you’re having trouble qualifying for a loan on your own, find a guarantor. A guarantor is typically a family member or close friend who agrees to take on the loan repayments if the borrower is unable to repay the loan.
This reduces the risk for the lender and may increase the chances of approval. This works best if the guarantor has a good credit history and financial stability.
Having a guarantor can also help overcome other challenges that may result in rejection, such as a low credit score, insufficient income, or a high debt-to-income ratio.
- Look into government assistance programs
There are several government assistance programs available that can help first time home buyers with things like down payments and closing costs. Be sure to research these programs to see if you qualify and how they can help you reach your homeownership goals.
Ready to get back on track towards owning your dream home? Call North Brisbane Home Loans
Well folks, there it is! Getting your home loan application rejected can be a bummer, but of course there are options available to help you get your head back in the real estate game.
And if you’re ready to take the next step forward, give us a call. Click the button below to speak with one of the best-rated home loan mortgage brokers in Brisbane!