Applying for a home loan doesn’t necessarily mean that the applicant will actually get it. To put it like this, an aspiring homeowner ought to “jump through hoops” to get the much-needed financing for a new house.
Now, there are plenty of reasons why a lender might choose to reject a home loan application and assessing what the problem is will get you halfway to solving it without too much hassle. So, we’ll give you some knowledge on what exactly you should do in order to make sure that you have the highest chances of acquiring the loan you’ve been looking for.
What Should I Do?
1. Get Familiar with Your Credit File
Your credit file is issued by your bank and consists of every single transaction you’ve ever made, as well as of your current “state” as a customer. If you’ve ever defaulted on a loan or missed on multiple, consecutive payments, those will show up on your credit file.
It goes without saying that the cleaner your credit file is, the higher your chances of getting the loan become. Checking this file prior to handing it out to the lender allows you to take care of possible mistakes or erroneous information that might’ve slipped in it.
2. Make Sure You Afford the Deposit
What many potential home-buyers fail to understand is that loans do not cover the entire price of the property, but only 80% or so. The rest of 20% has to be covered by the borrowers.
You might think that 20% is a piece of cake, but it’s not. If the house you want costs AUD 200.000, just to give you an example, you’ll have to pay AUD 40.000 upfront as a deposit. It’s a big deal now, isn’t it?
3. Assess Whether You Afford the Loan or Not
If your income doesn’t allow you to borrow money without eating canned food for years on end, your lender will reject your application, and that’s actually a good thing for you.
It’s certainly better to get back to shopping around then reach your wits’ end trying to figure out how you’ll muster the money for the next monthly repayment.
4. Prepare All the Paperwork Beforehand
If you wait for the lender to tell you what documents you should add to your application file, you’re doing it wrong. Hire a professional that’s versed in loans and the application process and you’ll go down to the lender’s office with everything you need to make a good impression.
5. Concluding Remarks
More often than not, lenders reject applications because the applicants haven’t done their homework, i.e.: they apply knowing full well that their income is too low, they ask for too much right off the bat, they’ve got a history of delayed payments on previous loans, etc.
The best way to ensure that you won’t be wasting both your time and the lender’s is to take care of all these things before you even think of filing in that application. Hopefully, these tips we’ve provided here will play a major role in your success.