Having your home loan application declined can come as a surprise, but, it doesn’t mean you should stop trying. It is often the simple problems that make an application unsuccessful, but they can be fixed.
 
Chat with the lender
 
Your lender knows what makes an application successful, so by speaking with them, you will know what was wrong with your application. There are several reasons why a loan application would be declined. Some include: too many financial commitments, not enough savings and a poor repayment history. By speaking with your lender, they will let you know what was wrong and also give you tips on what changes you need to make before applying for another home loan in the future.
 
Look at your credit report
 
Your credit report is one of the most important factors lenders look at when assessing your application. It is important to regularly check your credit report to see if there are any defaults and to make sure there is no incorrect information.
 
Defaults will need to be paid for most loan applications to proceed. Paid defaults can still portray a negative image of you, so you will need to have a detailed explanation of what happened.
 
Check your finances
 
If your home loan application is declined, it does not mean you have to completely change how you manage your finances straight away. Learning how to effectively manage your finances may take some time and should be done gradually. You will need to look at all of your financial commitments and see what changes you can make.
 
Credit cards and store cards can affect your application. Paying off these debts should be made a priority as they often charge high interest rates. You will also be able to use the extra money to put towards your savings. Lenders like to see that you are able to consistently save money.
 
Remember, even if you have a credit card with a $0 balance, the lender will still use the maximum limit. So, if you don’t need the card, then you should cancel it. This will also take away the temptation of making future purchases with credit.
 
Implement change
 
If you review your finances and chat with your lender, but don’t implement change, then you can’t expect to be successful when you apply for a home loan in the future. 
 
A simple budget can make all the difference as it will help find any extra money which you can put towards paying off other debts and your savings. It is extremely important for you to make all repayments in full on time as it will stop any defaults from appearing on your credit report.
 
Disclose information
 
A lender will find out about any defaults or problems whether you tell them or not, so it is not beneficial for you to hide any information. By sharing any defaults or declined applications early on, the lender will be able to do their best to help you.
 
If your home loan application is declined, it doesn’t mean you should give up. If you take the necessary steps, you will have a better chance of successfully taking out a home loan in the future.

Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker

Anouska Linz

Anouska Linz is Manager, Online Sales at State Custodians and has over 10 years’ experience in financial services, both in broking and banking. Holding a bachelors degree in accounting, Anouska quickly discovered a love for mortgage lending and assisting people to achieve their home ownership goals. She leads a team of highly experienced lending specialists who are passionate about finding lending solutions which result in real wins for the customer. She is also a massive netball fan.

For more information on our home loans, visit www.statecustodians.com.au or call 13 72 62.