Taking out a home loan to purchase your ideal house is a great option for those looking to enter the property market or expand their portfolio. After all, a house is a major purchase, and the majority need to organise a loan to make this dream a reality. But while no one can stop you from applying, no one can guarantee that you’re going to be granted the loan, either. What happens when your loan is rejected? What can you do, at this point?
Why were you turned down?
The first step is to get to the bottom of the problem and find out why you were turned down. You can ask your broker or lender directly, and they should be able to give you an answer on what part of your application was not suitable. You may even be able to rectify the situation and turn a rejection into an acceptance. For example, if your credit score was the issue because of a default, ther may be alternative lender and options for you to pursue.
What can you do about it?
Refusals mainly occur due to a lack of income, deposit or credit worthiness (credit score). You may think that this is the end of the road, but that may not be the case, you can re-apply for a loan targeted specifically to a lower-income bracket, look at alternative lenders that are more flexible when it comes to credit worthiness (credit score) and or deposit required. There are over 30 financiers in Australia whcih provides a lot of choice.
Take control of your credit score
A bad credit score which usually comes from default listings is a common reason to reject someone’s application, but you shouldn’t take that hit lying down. Instead, take action and get a free copy of your credit score from any major credit score organisation. Now, review it to check for errors and study why you are considered to be high risk and what poor behaviour you have engaged in. If you know what mistakes you made, you can start fixing them and improving your behaviour. That will demonstrate responsibility and a pattern for improvement. There are options to get approved if you do have defaults listed on your credit file however whats important is that you put measures in place to rectofy those issues through a repayment arrangment or pay them out completely.
It is important you don’t panic. The truth is that loan rejection is certainly not uncommon; it only means that you have further work to do to before home ownership becomes a reality. If you provide evidence that you have become a reliable potential borrower, with a positive saving strategy, you will be able to obtain finance for your dream home. Just don’t to panic and take things one step at a time. Good luck!