What to do if the big banks turn you down
Having a home loan application turned down happens to thousands of people every year. But if it happens to you, don’t be discouraged. The good news is that if that happens, there are alternative lending options available. Specialist lenders recognise that everyone's circumstances are different and they don't believe in a one-size fits all approach to your loan application.
Major bank home loan processes
A rejected loan by a traditional lender may be a reflection of the lender’s current credit policy or risk appetite, which loosens or tightens based on current market conditions and their risk management processes.
This means as a borrower you may have had no issues getting a loan from a bank in better economic times, but you might be rejected today because it’s a tougher financial climate.
At such times it’s worth talking to your trusted Mortgage Broker because they might have access to products that can suit your needs, that the major banks don’t offer.
The other big reason for an application being turned down can be your credit history. Major banks and other traditional lenders use an automated credit scoring process, which means your application might be declined simply because a computer gives your application a score based on your credit history.
Non-bank home loan processes
While it can be disheartening to have been declined a home loan due to your credit history, there is light at the end of the tunnel. Because non-bank lenders, can offer you a different approach to your home loan application.
Why would a bank decline your mortgage application? Perhaps you don't have up to date tax returns, because you’re self-employed. Or perhaps because you’ve filed for bankruptcy in the past? Two quite different sets of circumstances that may not fit a traditional lender’s loan suitability and credit assessment criteria. But with some non-bank lenders, your application is assessed individually by an underwriter against their loan suitability and credit assessment criteria that looks at your overall credit situation. So each application is assessed on its individual merits, by a person, not simply judged against an overarching credit score by a computer.
This means that when it comes to your home loan application, if you have defaults or judgements against your name, specialist lenders can still consider your application and you may still be eligible for a home loan that suits your needs, provided that they are satisfied that your application complies with their loan suitability criteria. Specialist lenders are more concerned with assessing why the defaults and judgements occurred, your current means of income, your ongoing ability to repay the loan without incurring financial hardship, where the property is located and the size of your deposit.
At My Finance Consultants we believe everyone has the right to achieve their financial goals, we make it our mission to offer alternative lending options when appropriate. Speak to your trusted Mortgage Broker about how they might be able to help you when the major banks decline your home loan application.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.