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What to do if the bank says no to your home loan application

A person at a bank, making a home loan application

When it comes to applying for a home loan, not everyone ticks the boxes with a lengthy permanent employment, more than 20 per cent deposit, and an impeccable credit history. But that doesn’t mean you have to miss out. Fortunately there are a range of lenders who will still consider applications even if you’re not the ideal borrower. Read on to find out what to do if the bank says no.

Why was my home loan application rejected?
The fact is, even if you’ve been a loyal customer of your bank for years, when it comes to applying for a home loan there are no guarantees. It’s not unusual for banks to approve a new customer and decline one who has banked with them for years.

There are many reasons why your bank may have rejected your home loan application but here are the most common ones:

• High debt: if you have a car loan, personal loan or unpaid credit card balance, this could affect the bank’s decision to lend to you. Banks will look to minimise your risk and too many debts may mean you’re unable to afford your mortgage.
• Poor credit history: falling behind on credit card repayments or missing repayments of monthly bills could mean you have a bad credit history which could impact your ability to access credit from your bank.
• Unsteady income: banks are usually more reluctant to approve home loans to applicants with inconsistent income, like those who are self-employed or those with an erratic work history.
• Low deposit lending: banks are limited in how much lending they can do to borrowers with deposits of less than 20 per cent. Once the funding runs out, banks will have to decline further applications.

What are my options?
Regardless of why your home loan application was turned done, the good news is you still have options for home loan lending.

Non-bank lenders can be an excellent solution for borrowers who have had their home loan applications turned down by a bank. As they aren’t as tightly regulated as conventional banks, non-bank lenders are usually more lenient with their lending criteria. Offering competitive home loan solutions, non-bank lenders also offer personalised products and services like bad credit home loans.

A Mortgage Express adviser can help you look at a range of lending options, from mainstream to non-bank lenders, to see which one best fits your particular situation.
And your mortgage adviser can help you craft the best possible mortgage application so you have more chance of success.

If you don’t tick banks’ tick boxes and you’d like help finding a home loan, get in touch with our team today.


The information contained in this article was prepared by Mortgage Express Limited. While every care has been taken to supply accurate information, errors and omissions may occur. Accordingly, Mortgage Express Limited accepts no responsibility for any loss caused as a result of any person relying on the information supplied in this article.
This article does not constitute regulated financial advice to retail clients. It may not be relevant to individual circumstances. Nothing in this article is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this article.
A disclosure statement is available on request and free of charge.

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