What Are Some Reasons for Rejection of Loan Application?
Applying for loans can be a hard and tedious process that requires a lot of time and perseverance. That’s why when loans get rejected, it can be very frustrating and discouraging. It is important to know and understand the main reasons that loans get rejected before you apply. This way you can fix any present issues prior to submitting your application and thus avoid the possibility of rejection.
These Are The Top 4 Main Reasons New Loan Applications Are Rejected:
Loan Serviceability
Serviceability describes the ability of a borrower to fulfil loan repayments, and when it comes to the serviceability of loans, there are three factors which can be very important to lenders.
- Income: Your income needs to be sufficient to service the loan and still afford your cost of living.
- Job Security: Lenders like to see you have a stable income before they will lend you money. This means that if you’re in your probationary period or you work on a part time or casual basis, then the chances of obtaining a loan for your situation will be significantly reduced.
- Too Much Debt/Overcommitted: If you have too much debt and you look to be struggling, the lender will consider you too risky to lend money to. If you feel overwhelmed by the debt that you have, Debt Fix may have a solution that will help you settle your debts quickly and affordably.
No Demonstrated Savings
If you can demonstrate a track record of savings and show the bank you are able to put money aside it gives them confidence in your ability to pay off a mortgage. If the reason why you can’t save money is because you are busy trying to pay off current debt (credit card and personal loans), then Debt Fix can help you consolidate your debts and pay them off quickly.
Issues with Credit Rating
A bad credit reputation, unpaid bills, too much debt are all common reasons why your mortgage application can be declined. Even excessive activity on your credit check (like shopping around for finance) can cause problems. Debt Fix can assess your position and provide relevant solutions which will assist you in getting on top of your debt once and for all.
Lack of Funds
Lenders want to minimise risk as much as possible. This means that if you can’t pay the mortgage or other forms of repayment, lenders will want the option to sell your property and other assets in order to cover the price of the loan.
If you’ve less than a 20% deposit, lenders will insist you pay for ‘lenders mortgage insurance’. This is a fee for not having a large enough deposit. Having a deposit which does not meet the required amount will tend to be an issue, especially if your profile suggests risk in any other criteria. Debt Fix has a dedicated team who can help you with a mortgage when the time is right.
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Turned down for a loan everywhere?
If you’re struggling with any kind of debt don’t be shy to seek professional help. Before applying for any type loan it’s important that you speak to a debt professional in order to understand your ability to pay off the loan in the future. If you need any help managing your debts, please don't hesitate to contact our specialists on 1300 332 834 or leave an enquiry for more information.