House hunting may be exciting, as well as applying for your first home loan application! However, things can go south quite quickly if you find that your loan has been rejected. At this point, you may be wondering what caused your lender to reject your application. Having an idea of why your loan was rejected will give you better chances of getting approved when you apply again in the future.
This blog post will share some possible reasons why your initial application had been rejected. However, before we begin, it is worth noting that having a rejected home loan application may hurt your chances of getting approved in the future. Here, you will also learn about what you can do to strengthen your chances of approval when you turn in your application.
Possible Reasons Why Your Home Loan Application Was Rejected
A rejected home loan application will get in the way of you buying a home of your own. If you had recently had a loan application that was rejected, here is a list of some of the possible reasons why the lender rejected your application.
1 - Defaults or Bankruptcy on Credit File
Your credit record will be meticulously checked when you apply for a home loan. If you have missed payments, outstanding loans that defaulted, or even been late in paying your bills in the past, it will come out in a credit report. Your lender will look into your credit history and make a decision as to whether you risk defaulting on your mortgage based on these past habits. If you know that your credit report is not up to par, it is best to improve your paying habits before you apply for the loan.
2 - No Proof of Savings
Your chances of coming out with an approved home loan may be affected if you cannot show proof of savings. As a general rule, you must be able to show proof that you have been contributing to your savings account for the past three months.
3 - Shooting for the Moon
Going for a property that is too expensive, especially if you are part of a lower income bracket may also affect your chances of getting approved. Looking into houses that have prices that match the income you receive will improve your chances of getting an approved home loan.
4 - Issues with the Property
There may also be a chance that your lender may not approve your loan based on the type of property you are trying to buy. Some lenders do not provide loans for small apartments. Knowing these restrictions before you apply will help you know if the property you are looking at will affect your loan application.
This list may not include all the possible reasons for rejection but these are a few of the most common. If you think you might fall under one of these categories, it is best to follow the tips mentioned above before applying for a home loan. Also, talking to your mortgage agent will help you get your best chances of coming out with an approved home loan at the end of the process.
Work with a tried and tested mortgage company by applying for a loan with Wealthy You! We are an Australian Mortgage Company servicing Sydney for almost a decade and because of this, we can offer you a variety of mortgage solutions to meet your specific financial needs. As an alternative lending specialist, we make refinancing your home simple. Make an appointment with the best mortgage brokers today!