So you’ve submitted your application home loan, and awaited the news with bated breath. But when the answer came back, it wasn’t what you were hoping for: you got your loan declined after preapproval, or you got your loan declined after unconditional approval.
It can be a disheartening moment; but it’s not the of the road! Here are some tips to help get that home loan application approved next time round.
Potential pitfalls when applying for home loan
It’s important to remember the home loan rejection reasons that lenders often look for before you start. These include not having the necessary financial documents or income to support the loan, having too much debt, applying to too many lenders, or not having a good credit history.
Your home loan application may also be rejected if you fail to meet certain eligibility criteria set forth by lenders such as age, employment type or residency status.
Can a loan be denied after unconditional approval?
Yes. Although lenders may initially approve a loan application based on the borrower’s credit score and other factors, they may still decline the loan if additional checks reveal that the borrower does not meet certain criteria or other conditions are not met.
The lender must provide the borrower with reasons for their decision to deny the loan.
I got my home loan declined when can I apply again?
It depends on the circumstances surrounding your loan denial. In general, you should wait at least six months before reapplying for a loan after being declined.
What if my home loan is rejected? Here are 10 things you can do to increase your chances of approval on your next application
1. Start by improving your credit score
Check your credit report and make sure that any errors are rectified, as well as paying off any outstanding balances or loans. If you want to increase your credit score quickly, try paying off some of the smaller debts first (e.g., Buy Now Pay Later debts). Also make sure that your debt-to-income ratio is low enough to fit within the lender’s requirements.
2. Save up a larger deposit
A larger deposit indicates to lenders that you are more financially stable, which can result in better interest rates and an overall lower debt burden for you. Aim for 20% of the total loan amount if possible.
3. Get organised
Make sure all of your financial documents are in order before submitting your application, so that the lender has all the information they need about your income, assets and liabilities. This includes bank statements, tax returns and pay-slips amongst other things.
4. Avoid switching jobs right before applying
Try to stay with one job for at least 12 months prior to submitting an application. Stability is key when it comes to being approved for a loan!
5. Be honest on the application form
Misleading information on your application can lead to it being rejected – even if it was unintentional. Make sure everything is accurate and true!
6. Don’t overspend while waiting
Lenders like to see that applicants are living within their means in between applying and getting approved. Avoid making too many large purchases or taking on any more debt until after you’ve been given the go-ahead from them!
7. Understand what type of loan suits you best
Different types of loans offer different terms, conditions and eligibility criteria. Do some research into what would be best suited to you and your needs before submitting an application – this should help increase chances of approval!
8. Shop around for lenders
Different lenders have different criteria for determining who they loan money to. Shop around for those whose criteria suit your profile best and apply with them first!
9. Consider applying jointly with someone else
If two people apply together then chances of approval usually increase significantly due to their combined incomes increasing their overall ability to pay back the loan on time!
10. Talk with a mortgage broker
Mortgage brokers understand the market better than anyone else. They are familiar with the different mortgages, lending policies, and requirements of different lenders and can help you find the loan that best fits your needs. A mortgage broker also has access to exclusive mortgage products from lenders that may not be available to the public
Do I qualify for a home loan? Work with the team at Q Financial
An application for a home loan can be a nerve-racking experience especially for hopeful first home buyers. But if you’re someone who just cant get a loan finds themself in a “I need a loan but keep getting declined” kind of situation, it is about time you do the real leg work of knowing what the home loan rejection reasons are, and what you could do to increase your chances of approval on your nex home loan application.
To get an accurate picture of how you’ll fare on your next home loan application, we highly recommend working with mortgage brokers — like us! At Q Financial, we will:
- provide you with an accurate assessment of your current financial and credit situation;
- give you advice on how to best improve it before reapplying for a home loan;
- make it our priority that you get a quick approval;
- present you with flexible borrowing options; and
- offer an obligation-free consultation!
Give us a call today and let’s get started on securing that home loan approval – together.
