Help! My bank won’t give me a mortgage, what should I do?

Couple at desk with computer declined a mortgage

So, you’ve been dreaming of that little nest, a place to call your own, and you’ve gathered up the courage to take the plunge. Only one problem: your bank has thrown you a curveball and declined your mortgage application. That new home now seems like a distant dream. If this has happened to you, don’t hit the panic button just yet. Rejection from a bank for a mortgage might seem like a setback, but it’s more like a pit stop.

Understand the ‘Why’

Before you try to find the solutions, it’s vital to understand the root of the problem. There are many reasons a bank might decline your mortgage application: low credit score, insufficient income, unstable job history, or maybe you’re asking to borrow more than you can afford. Whatever the case, your bank should provide a detailed reason for the denial. This will give you a roadmap for what needs fixing.

Seek Expert Advice  

A financial advisor or mortgage broker can offer tailored advice, provide insights on how to make your application more attractive, or introduce you to alternative lenders you might not have considered. While one bank said ‘no’, another might shout a ‘yes’. Banks have varying criteria, interest rates, and products. A different bank might have a mortgage product that’s a better fit for you. Speaking to a mortgage advisor or broker could provide the solution, as they have access to the whole of the mortgage market, and may be able to find a lender whose criteria you meet.

As we look to get things back on track for you, there’s a variety of considerations that we will look to make, examples of these could be:

Work on Your Credit Score

Your credit score is like your financial report card. A low score can often be the culprit behind a declined mortgage. But, there are numerous (and simple) ways to elevate it:

  • Pay your bills on time, especially credit cards and loans.
  • Lower your credit utilisation – basically, don’t max out your cards.
  • Avoid applying for new credit too frequently.
  • Register on the electoral roll.
  • Check your credit reports for errors (yes, they can make mistakes!).

Time and consistent effort can do wonders for your score. Patience is your ally.

Consider a Larger Deposit

One of the things that can swing the odds in your favour is a bigger deposit. We know, it’s easier said than done, but the larger your down payment, the less risk you pose to lenders. Start saving, cut unnecessary expenses, and if you’re able to, consider a second job or side hustle to boost your savings. Perhaps the bank of mum and dad are able to help, and if you receive a little windfall, surprise bonus or tax refund your way, channel it to your home fund.

Consider Non-Bank Lenders

Apart from traditional banks, there are other lenders out there willing to offer mortgages. Credit unions, online lenders, and mortgage brokers, like HLC, can often provide or find more flexible loan options and criteria than your run-of-the-mill bank. Seeking help might be just the ticket to getting you that home key. Simply fill in our contact form and one of our friendly team will be in touch with you.

Re-evaluate and Reframe

If you’ve tried it all and the doors seem to be closing, it’s okay to take a step back. Maybe it’s time to re-evaluate your goals and what you can realistically afford. Consider looking at more affordable properties, exploring different locations, or even taking a bit longer to save and boost your financial position.

In Conclusion

While a mortgage rejection can be disheartening, it isn’t always the end of the road. Remember, every challenge is an opportunity in disguise. Your dream home is out there, and with persistence, savvy decisions, and perhaps a bit of outside-the-box thinking, you could be turning that key before you know it.

If you’ve been declined for a mortgage or would like help with mortgage and protection products available, contact one of our friendly advisors who would be happy to have a chat and help guide you through it all.


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