- Posted 12 Oct
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If you are in the process of house hunting but you’ve been turned down for a home loan, what can you do? The first thing to remember is not to panic. Different lenders have different criteria for mortgages, and one rejection doesn’t mean that you won’t be able to buy a home.
But the other thing to know is that every credit refusal hurts your overall credit rating and makes other lenders less likely to consider you. This means that it is important to do your research before making your next move. If you’ve been rejected for a home loan, follow these steps to understand what went wrong and make a new plan:
Why was your application rejected?
Any lender who turns you down should be able to give you a detailed explanation for why your loan application was not accepted. The information you discover can help your chances of success the second time around. Based on the information you receive, you can clean up any financial inaccuracies and choose a lender who is more willing to work with your situation.
Research other lenders
If your first choice for a lender has said no, it’s time to regroup and change your approach. Depending on why you were rejected, you may want to look for a particular type of lender. For instance, if your loan was rejected because of a particular mortgage insurer, make sure that you choose a lender who works with a different company so you won’t automatically be rejected again. Find out as much information as possible about why the lender turned you down and use that data to find a different partner.
Work on repairing credit
Ideally you should run credit reports before making a loan application to make sure there are no inaccuracies in your past history. But if the lender does find a problem you can take steps to clear up errors.
But what if you’ve made poor choices in the past and your low credit scores are accurate? This is more of a long-term fix, but you can always take steps to clean up your credit. You’ll want to step back, keep saving for your deposit, and in the meantime make sure you don’t make any major purchases and that you pay every bill on time. Then in six months or a year check your credit history and try again to get a home loan.
Being rejected for a loan isn’t that uncommon, and it’s not the end of the world. Just remember that one rejection doesn’t mean that you’ll be outcast forever. You may need to work a little harder and the process may take a little longer, but have faith that you’ll be able to get a loan.
Whether you are planning to purchase your first home or are a veteran at property investing, Australian Credit and Finance is here to help. Our loan experts are the best, so contact us today to get your home loan process started.