Loan shopping: Unforseen consequences

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This sounds very odd: but shopping around for a competitive mortgage can have unforeseen negative consequences (unless you use a good mortgage broker that is).
 
I recently helped a client who had just received a decline via their major bank branch. The application was declined because it failed the bank's "Credit Score". 
 
The reason for this decline was a complete mystery to these clients who had decent incomes, pretty good savings and long term jobs (even the branch didn't know why).
 
Then I looked at their credit report. The clients had applied for six different loans over the last six months. Three of these applications were for the same home loan (via three different bank branches). The client was simply shopping around in their local area. The others were for credit cards and a car loan.
 
With some lenders, not all, it’s an automatic decline when they see this many inquiries on the credit report.
 
Even so I was able to get the loan approved with a lender, using my inside knowledge of how the lenders work. But it caused several moments of stress for the clients indeed.
 
Please don’t make multiple applications to multiple banks unless you really have to.  Better to find the right bank first off and make one application only.

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Catherine Lezer

Property is Catherine Lezer’s passion. She owns nine properties of her own and has a fundamental understanding of how the property market works. 

“I’ve bought some great properties and some ‘bad’ properties, and even the bad ones have made me money,” says Catherine. “Property is the most reliable way to make money that I know!”
 
“I’ve purchased, sold, tendered, offered, negotiated, won and lost at auction, developed and renovated so I understand what happens out there in the market,” she adds. “Being able to help other people finance property is an added bonus for me.”
 
Originally from Perth and now based in Sydney, Catherine joined Smartline in 1999 with over 25 years of banking experience and qualifications include a Bachelor of Business and an MBA. Catherine has helped hundreds of clients finance houses, semis, terraces and apartments, with the majority of her business coming from word of mouth referrals.
 

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Thursday, Sep 21, 2017
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