So you finally found the property you like to buy, you have applied for your home loan and ticked all the boxes but for some reason it got rejected. Why?
The property needs repair
Any problems potentially leading to the buyer vacating the property before the loan contract is fulfilled may lead to an application being denied. So if after the pre-approval process you find the property requires major repairs involving the foundation or structure or major problems around the liveable space, your application may be turned down by the lender.
In the initial application process you only have to submit limited information and based on this may have been granted pre-approval. You are then asked for more detailed information, including a financial history, and suddenly your application is rejected. If a lender does not like any information about your financial history, including carrying too much debt, your home loan will be refused.
Being late to provide documentation
Filling out forms and providing information is part and parcel of the application process. It can be confusing and time consuming. If you fall behind or fail to supply your lender with the requested information in a timely manner, your loan may be cancelled. So make a concerted effort to provide documentation within stated time limits and your lender will keep your application alive. Fail to do so can result in your application being cancelled.
Lost or reduced income
Your lender may refuse an application if your income is lost or reduced at any time during the application process. This is particularly pertinent for self-employed applicants who may have peaks and troughs in earnings during the year. Even if your work is guaranteed to recommence or pick up, your lender may still refuse your home loan application.
Mitch Fraser is co-founder of Tomorrow Finance, an independent comparison website of home loan rates. They provide comprehensive home loan information and connect clients directly with the major banks to discuss their personal home loan situation.