Did you hear Kylie Minogue recently called off her engagement because her partner cheated on her?
It seems strange that such a beautiful, vivacious star could be treated that way. After all, shouldn’t that sort of thing only happen to ‘undesirable’ men and women?
Funnily enough, applying for a mortgage is a bit like looking for love: even successful people can get the cold shoulder.
Yes, it’s true: being declined for a home loan is a lot more common than you think.
Just as romantics hear all sorts of strange reasons why he/she is just not that into you, lenders can also take us by surprise. Here are four strange reasons they might decline your loan.
- It’s not you, it’s me
Lenders like to have balance in their loan portfolio as a way of spreading their risk. That means they don’t like to have too many loans from the same lending sector (ie: investors) or the same postcode or the same industry. So they might decline your application just because they already have too many similar loans on their books.
- They’re not ready to move on
Lenders might automatically reject your loan if the information in your application doesn’t match what they’ve got on file. That seems reasonable, but what if you’ve made a genuine mistake? Or what if you’ve experienced a change regarding your marital situation or how many children you’re supporting or how many credit cards you have? If you are lucky they will ask you to explain if not, you may never know.
- You once messed up
Remember that time when you fell behind on your credit card repayments or you overdrew your savings account a few times? No? Well, unfortunately, your bank might. Even though it might’ve been a one-off mix-up that happened a few years ago, lenders can have memories like an elephant, and might decline your application even if your subsequent behaviour has been exemplary.
- You party too much
Banks can get suspicious if you make too many withdrawals from ATMs on weekends and this is stopping you from saving. Not having assets to show for the money you earn and subsequently spend can be an issue especially when it is an ongoing thing. You might be stereotyped as a spendthrift who can’t stop making impulse buys or who has a gambling problem. Unfortunately, banks don’t like to give mortgages to people who are not good with money.
Having a home loan application get declined is serious stuff – and not just because of the amount of time wasted but because of the psychological impact of being told ‘no’. If you have never had an issue getting finance before it can be a serious affront which can make you want to retreat to the nearest exit and never apply again.
You will also have an enquiry on your credit report which subsequent lenders may ask you about. They will want to know if it proceeded and if it didn’t why it didn’t. Having to ‘fess up to a decline can be a humbling experience and the new lender may be more cautious because of it.
What all this shows is that there is a lack of transparency in lending. None of the above is written down anywhere for consumers to tick off and so ordinary people can’t know ahead of time whether or not their application is going to be approved.
There is probably more information about a new car you purchase for tens of thousands of dollars than a home loan that you take out for hundreds of thousands of dollars. The vast amount of detail behind the loan and who qualifies is not freely available and this is where borrowers need to show caution.
That’s where the idea of Lending Mate came to be. Peter Ellis wanted to be able to give borrowers a better deal than what they were currently getting. To cut through the secrecy and educate borrowers on what’s actually going on behind the scenes. His dream was to give people all the information they needed to make proper decisions about lending.
Borrowers deserve better. I am sure you would agree that if Kylie Minogue had been told in advance that her partner had a roving eye, she probably would’ve made better romantic decisions.
By Peter Ellis
The Borrowers Advocate, Lending Mate™
Peter is a trail blazing campaigner with a vision to put power back into the hands of borrowers. He was disheartened by an industry where home loans were less about the individuals borrowing the money and more about sales targets. Those impacted most were people that didn’t tick all the boxes to fit the ideal profile, who were often being left to fend for themselves.
Lending Mate™ wants to restore this power imbalance and start a movement where borrowers get a fair go. Lending Mate™ is having someone on your side, genuinely working in your interest to enable you to get ahead financially. We aim to provide the information, help and guidance you need to put you back in control.