How to Avoid Getting Your Loan Application Declined

One of the most frustrating things that could happen to a homebuyer is getting your application for finance declined.

By this stage, you’ve already likely been to dozens of home opens, organised all your paperwork and potentially even put an offer in on a house. Falling over at the last hurdle is not only frustrating, but it can also feel like your dreams are over.

But they don’t have to be, and more importantly, there are a few things you can do to make sure your loan application doesn’t get declined.

Borrowing Amount

The more you’re looking to borrow from a lender, the more risk it presents to them. If you want to borrow more than 95%, that can be a red flag for a lender.

Most banks like to see you come up with a 20% deposit, which means an 80% LVR. While this might not be possible, there are other options you can look at like a higher LVR and paying Lenders Mortgage Insurance.

If you do need to borrow with a higher LVR and only have a small deposit, you might want to look at a guarantor loan or even taking advantage of a Government program such as the First Home Loan Deposit Scheme.

Stable Employment

In a perfect world, when you apply for a loan, the lender would like to see that you’ve got a long-term stable job with a regular paycheck.

Unfortunately, things are not always that simple and these days, many people have very unique work situations. If you’re self-employed or haven’t been in your current job for at least six months, then lenders might not look favourably on your application.

Fortunately, there are lenders that understand your situation and therefore it is important that you work with a mortgage broker who can match your employment situation with the right lender.