Was Your Mortgage Application Rejected by Your Financial Institution?

Are you dealing with a mortgage application that has been denied or rejected by your bank?

Many mortgage providers have become extremely stringent with their lending practices, citing reasons such as government regulations or shifts in lending policies. This could explain why you might have faced a rejection.

It’s essential to remember, though, that not every bank operates in the same way!

Each one has unique lending policies, and with the help of an adept Mortgage Broker like OzBroker, you can identify a lender who can cater to your specific needs.

In this post, we’ll elucidate 9 common grounds on which banks reject mortgage applications and how OzBroker can guide you through these obstacles.

1. Inadequate Deposit

Nowadays, banks require a deposit constituting 8-10% of the property’s value to approve a mortgage…

…BUT, certain circumstances allow you to engage a guarantor, facilitating borrowing up to 100% of the property value along with added expenses. This strategy also helps in avoiding lender’s mortgage insurance, typically needed when the deposit is less than 20%.

Different banks have varying credit lending policies, so what’s considered a small deposit for one might be acceptable to another.

2. Being Above 45 Years Old

Although anti-discrimination laws exist, lenders may require an exit strategy for paying off your mortgage if you’re over 45.

These conditions might narrow your mortgage choices due to your age.

Some universal exit strategies for those above 45 include:

  • Downsize to a more compact house upon retirement.
  • Liquidate other investments such as properties or shares.
  • Utilize funds from your superannuation to pay down the loan.
  • Depend on a recurring income from your superannuation fund.

3. Age Matters for Young Applicants Too

Young applicants face challenges from banks as well.

While under-18s cannot apply for a mortgage, even being under 25 can negatively impact your credit score. A lack of credit history might hinder your application, but remember: not all banks score credit the same way, and OzBroker can assist you.

4. Your Spending Habits

Most banks will scrutinize your transaction history from the past 3 to 4 months.

Spending excessively on non-essentials can affect your application. Lenders assess your monthly expenses to gauge if you can sustain mortgage repayments.

5. Employment Duration Under 12 Months

Many banks require you to have been in your current job for 6-12 months if you’re borrowing more than 80% of the property’s value.

With OzBroker’s network, we can identify lenders willing to lend even if you’ve recently started a new job.

6. Self-Employed Applicants

Being self-employed for under two years often leads to rejection by banks.

OzBroker specializes in self-employed loans and can find lenders willing to consider applications from those self-employed for just 12 months.

7. Bad Credit History

A negative credit history, including minor defaults or judgements, can lead to rejection.

Even small defaults can result in denial, but with the right lender, OzBroker can make sure your loan gets approved.

8. Excessive Loan Applications

Too many credit inquiries in the past 12 months can cause rejection.

Fortunately, some lenders will still consider your application if there are reasonable grounds for the inquiries. OzBroker often collaborates with these non-credit scoring lenders.

What If Your Mortgage Is Declined?

Rejection is common nowadays, with almost 40% of applications denied earlier this year.

The best course of action is to consult an Expert Mortgage Broker like OzBroker. They’ll understand why your mortgage was declined and explore other banks and lenders that will review your situation equitably.

OzBroker’s team of credit experts is here to guide you through the complexities of mortgage applications. Let us help you find the perfect solution tailored to your individual needs.

Got any questions? Need further advice?

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