Getting knocked back for a loan is less than ideal, but rejection needn\u2019t be fatal to a property dream.<\/strong><\/p>\n John Tindall, a Choice Home Loans<\/a> mortgage<\/a> broker in Wattle Grove, Sydney, says being refused finance can be scary, but the key is to not panic.<\/p>\n He advises people to take a systematic approach to finding a solution. First, find out why the finance hasn\u2019t been approved, he says.<\/p>\n A mortgage broker can assess your likelihood for a loan without you having to speak with your bank. Picture: Getty Images<\/p>\n<\/div>\n \u201cI have had clients knocked back for all sorts of fixable reasons. For example, a mobile phone default that was actually someone else\u2019s. The next step is to address the gaps. Persistence usually pays off,\u201d Tindall says.<\/p>\n Most finance denials relate to income, he says.<\/p>\n \u201cUsually it\u2019s for not having enough income to make the repayments. Remember, you\u2019re not being assessed at a 4% interest rate, but at a 7% plus rate, for when rates inevitably rise,\u201d Tindall says.<\/p>\n \u201cKnowing how your type of income is viewed by the lenders<\/a> is important, whether you\u2019re full-time pay-as-you-go employee, casual or newly self-employed. Having too much existing debt, such as credit cards, is another handicap.<\/p>\n \u201cPoor credit history, showing late payments or old defaults, is another important factor. We recommend clients get a copy of their own credit report, which can be done for free,\u201d he says.<\/p>\n How to get a loan if you\u2019re self-employed:<\/strong><\/em><\/p>\n Bad credit doesn\u2019t have to be a deal breaker, Tindall says.<\/p>\n \u201cIt depends on what the issue is,\u201d he says.<\/p>\n \u201cIf it\u2019s, for example, four or more enquiries regarding different home loans, sometimes a simple explanation will satisfy a lender. If there\u2019s an old default or as a client of mine had, a $3000 mobile phone default caused by identity theft, you can apply to the party that lodged the default to have it removed.\u201d<\/p>\n There are also free credit repair services that will examine accounts and specify which ones need resolving and how to do it, Tindall adds.<\/p>\n Here are some of the factors lenders consider when assessing loan applicants:<\/strong><\/em><\/p>\n As with most things, knowledge is power when it comes to applying for a loan.<\/p>\n \u201cKnowing the strengths and weaknesses of an application is important. For example, a strong income is good, but a healthy deposit and a clean track record are important too,\u201d Tindall says.<\/p>\n \u201cHaving an independent assessment of your situation will tell you if it\u2019s time to go again. The trick is to present a good case to the lender in a way that their assessors will understand and accept,\u201d he says.<\/p>\n Beware of repeatedly applying for finance though, Tindall says.<\/p>\n \u201cLenders are definitely wary of people who apply for finance too often.\u201d<\/p>\n \u201cIt looks as though they\u2019re trying to shop their way out of trouble. Ideally, you don\u2019t want to submit an application unless you have a strong chance of success, and a mortgage broker can assess this for you without you having to speak with your bank.\u201d<\/p>\n
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