The process of buying a home is very tedious and lengthy, especially if you need a loan as the solution to financing.
You first have to see how much you can borrow and then find a home that would fit the criteria – after all, we can’t quite borrow as much as we’d want to. On top of that, there’s also the chance for your loan to get declined.
Because of this, you should submit your loan application as early as possible so that you don’t miss the purchase of your dream house. Still, why could your home loan be declined?
During the home loan application process, your lender will take a look at your credit report. The latter records the current loans that are in your name, any previous loan applications, as well as whether you have defaulted on a loan or failed to pay a bill on time.
Defaults and bankruptcy are considered as black marks and may count against you when applying for a home loan! We do however have alternative second tier lenders who can consider approval if you have bad credit or listed defaults.
Every home loan comes with a maximum loan-to-value ratio – LVR. The LVR is the maximum amount you can borrow and is expressed as a percentage of the property’s value.
As you may know, a deposit is also required for a home loan. For example, if you apply for a home loan which has a maximum LVR of 80%, then you will need to put down a deposit of at least 20%. Naturally, if you can’t do so and this is the requirement, your home loan will be declined.
It is also imperative you consider holding genuine savings if you are applying for a home loan with a deposit less than 20%. Not holding genuine savings may see your home loan get declined.
Under Australian law, each lender has the duty to responsibly lend money to their customers. This means that, if you are a low-income earner and want to buy an expensive property via a loan, the chances for your application to get declined are quite big.
Basically, if the lender determines that you will not be able to make regular loan repayments – now and in the future – they will decline your home loan application. The lender will need information regarding your income, as well as your debts. They will use this information to see how much of your monthly income you use to pay off your debts.
If too much of your income is used for previous debt, then they will deem you as unable to afford mortgage repayments.
Home loans will not be approved until and unless the property that one wishes to purchase is professionally valued.
The lender wants to make sure that they will be able to recoup their losses in case you default, and the property has to be sold. You may be willing to pay more for your dream house, but a lender will definitely not take any risks.
The valuation will need to be within the LVR guidelines and if it is a purchase, the valuation will need to match the Contract of Sale. Unless you have the funds to cover the shortfall, the lender may decline your application should the valuation not match the LVR or contract of sale.
Here at Highline Lending, we have access to ordering complimentary upfront valuations prior to starting a loan application and prior to clients committing to a property purchase, this ensures the valuation doesn’t have the loan declined and also helps us structure your finances.
As you can see, there are a lot of reasons why your home loan may be declined. In fact, you can be faced with such a decision even if you fail to provide your lender with enough documentation.
Therefore, applying for a home loan and ultimately buying a house is not as easy as it may seem. To overcome or prevent any issues that may get your home loan declined, you can always contact us and have one of our experienced mortgage brokers help you.
We will guide you through the entire process of finding a loan and help you find the one that fits your needs! Just reach out and contact us today for questions or more information!
Contact us on 02 8530 1107 or Submit your scenario online
Whether you’re a first home buyer looking at entering the market or an existing home owner looking at ways to save money on your home loan, we have you covered. We’ve put hundreds of hours of research into these guides to ensure you end up ahead, and it’s completely on the house.
We get paid a commission from our lenders as a result of introducing your business to them. Subsequently, our service is at no cost to you. Our commission does not affect your interest rate whatsoever, if anything, we’re in a position to get you a lower interest rate than the general public due to our relationships with our banks
We meet for a consultation, obtain your supporting documents and proceed to structure and package your application for approval knowing exactly what the banks want to see. We also monitor your home loan post approval ensuring you’re home loan suits you and your financial position
With our many years experience in the industry, we’ve been exposed to both easy and complex loan scenarios. Each loan we process gets presented to over sixty financial institutions, ensuring we have explored all options possible and are able to provide a solution
The odds are that you’ve stumbled across the term lender’s mortgage insurance and you’re wondering what it stands for. Well, you’ve come to the right place. This article will clarify this term, so that you can understand what it is, the concept behind it and the approximate costs. Let’s get started!
When you’re applying for a home loan, your lender might want to know how you plan to exit it. After all, it is a lender’s job to make you understand that you do have to plan your loan repayments and so on.
In this respect, you will need to come up with a proper mortgage exit strategy. You have to make sure that the financial path that you choose will be able to make you exit your mortgage on time and avoid missing any payments.
As we all know, saving money for a deposit can be quite difficult, especially when we are in a tough spot. Moreover, if you want to use that deposit in order to get a home loan and fulfill your dream, things are probably going to get more stressful for you in no time.
When you have a mortgage that you have to pay off, you also have two ways of dealing with it.
The most common and simple one is, obviously, paying it off as soon as you can and never have to deal with it again. It goes without saying why most people out there that have taken a home loan prefer paying off their mortgage on time or even quicker.
The odds are that you’ve stumbled across the term lender’s mortgage insurance and you’re wondering what it stands for. Well, you’ve come to the right place. This article will clarify this term, so that you can understand what it is, the concept behind it and the approximate costs. Let’s get started!
When dealing with a home loan, you will most likely come across the Loan to Value Ratio term. Obviously, everyone who wants to apply for a home loan should consider this term and what it implies, as it affects your borrowing power.
Trustindex verifies that the original source of the review is Google. 
Trustindex verifies that the original source of the review is Google. 
Trustindex verifies that the original source of the review is Google. 
Trustindex verifies that the original source of the review is Google. 
Trustindex verifies that the original source of the review is Google. 
Trustindex verifies that the original source of the review is Google. 
Trustindex verifies that the original source of the review is Google. 
Trustindex verifies that the original source of the review is Google. 
Trustindex verifies that the original source of the review is Google. 
Trustindex verifies that the original source of the review is Google. 
What you need to know before you purchase your first property and how to fast track it. We have designed this guide to get you up to date with everything you need to know about being a first home buyer. Whether you have a short term goal of purchasing your first property or are thinking about it sometime later down the track, this guide will cover important essential aspects of this exciting journey.
What the banks won’t tell you and how to save serious money on your home loan. By Investing 10 minutes of your time to read through our guide, not only will you learn the tips and tricks the banks won’t always tell you to assist you with paying off your home loan sooner, but also gain an insight into some techniques that will allow you to minimise the interest you pay to the bank.
The best way to take control of your finances is to use a budget planner. This is a simple tool that helps you understand the money going in and out of your household. With our Highline Lending Budget Planner, we’ve got you covered. This handy tool allows you to log and track your goals, track your savings, track your debt and expenses and keep a monthly record for an end of year evaluation.
