Want to ensure your next home loan application is successful? You could be facing rejection without even realising it…
The home loan application process is often long and sometimes very complicated. The sheer number of steps involved can lead many to get lost along the way. A 2019 survey by Digital Finance Analytics found around 40% of mortgage applications were rejected in December 2018, down from 48% the month before. So nearly half of all home loans around this time were facing rejection.
Many people are itching to enter the housing market right now with record-low interest rates and continually rising home prices. With an impending cash rate hike on the cards, and the prudential regulator (APRA) tightening its lending criteria in October 2021, it’s more important than ever to understand how to correctly apply for a home loan in order to avoid rejection.
There are a number of reasons why your home loan application could be passed on, and while it can feel disappointing to miss out, it’s important that a lender is careful about who it lends to.
A home loan is a massive amount of money to borrow, and should you bite off more than you can chew, both you and your lender will be stuck between a rock and a hard place. A lender can even cop a fine for not properly assessing its applications.
With this in mind, here are a number of well-known and not-so-well-known reasons for home loan applications being rejected.
Some of the more common reasons for home loan rejection include:
- Not having a high enough deposit
- Not having a high enough income
- Having poor spending habits
- Having a poor credit rating
- Not having the correct documents
- Incorrect information on your application
Full Article: Savings.com.au
