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10 reasons Australian lenders might reject your mortgage application [how to increase your chances of getting approval]
10 reasons Australian lenders might reject your mortgage application [how to increase your chances of getting approval]

10 reasons Australian lenders might reject your mortgage application [how to increase your chances of getting approval]

A survey conducted by LKFS Financial revealed that approximately 18% of Australians looking to get mortgage loans have been rejected by financial institutions.

Furthermore, close to one in ten residents in the country have been seeing their home loan application rejected by one of the big four banks in Australia.

This is a worrying statistic as it shows that one out of five people don’t get their home loan application approved. And the worrying part is that some people don’t know what they are doing wrong or what they need to change to address and change their situation.

This is where a mortgage broker in Melbourne like Blutin Finance can help. They will look at the various reasons why your mortgage application might be rejected and how to boost your chances of getting accepted.

Top reasons why mortgage applications are rejected

#1. You don’t have adequate deposit

The number one reason why your home loan application is declined is that most lenders prefer that the applicants have around 10-20% deposit or more on a potential property. This helps limit their exposure to risk.

#2. Lack of proof of savings

For banks, you must show proof of savings before they approve your home loan application. Failure to provide an accurate record of savings that indicate regular contributions over a period of three months or more would negatively affect your approval chances.

#3. Inability to pay

When you underestimate your ability to repay the loan, then your chances of getting a mortgage loan approved declines. Under Australian law, banks and other financial institutions are required to ensure that applicants can service their loans.

The banks look at how the mortgages can fit into your lifestyle and determine your worthiness. They will like to know if your income after tax can support your mortgage, groceries, bills, and others. If you can’t meet your loan requirements for a stipulated period, then the bank is likely to reject your home loan application.

#4. Property is located in a poor performance area

The banks have to consider the chances that you might default on your payment. When that happens, then would sell your property to recoup their funds.

Thus, the location of your property will determine the worthiness of your mortgage application as the banks won’t grant you a loan when your property is located in a poor performance area.

#5. Issues with your property

Asides the location of your property, the lender might also look into your property and rate it as a poor investment. For example, your property might be overpriced, or the bank might have too many mortgage funds tied in that area. Also, the banks might deem your property to be small and, as such, doesn’t have a high resale value.

#6. Poor credit history

This is an apparent reason why you might get rejected. If you have a couple of late payments on your credit card, defaulted on a personal loan, or have unpaid bills, then your chances of getting approval would be limited.

#7. Excess debt to service

When you apply for a home loan, the bank will dig out other loans attached to your name. If the bank realised that after taking out your debt repayments, your lifestyle expenses, and bills consume most of your income, then your application would likely be rejected.

#8. Failure to provide the required documents

This reason is also obvious. Failure to provide the necessary supporting documents such as bank statements, contact information, employment data, property specifications, and more, would lead to a rejection of your application.

#9. Employed less than 12 months or self-employed for less than two years

Most banks and financial institutions require that you should have been in your current job for at least 6-12 months. This makes you eligible to borrow up to 90% of your property value.

Also, if you have been self-employed for less than two years, your chances of getting your loan application approved are slim. Most financial institutions require you to be self-employed for roughly 2-3 years before they can approve your loan.

#10. You wish to buy a unique property

While unique properties are cool places to live in, they only appeal to a specific market, which in most cases are the rich people. Banks care about marketability. They need the availability of buyers of your property in case they need to sell when you default on your payment.

Ways to boost your chances of getting mortgage loans approved

To increase your chances of getting your loan approved, you can do the following:

#1. Consult a mortgage broker

This solution is top of the list because it is the best option available. Consulting a mortgage broker like this will make things easier for you as they would guide you through the entire loan application process.

The mortgage brokers will help you check your credit history and take steps to correct them, they would make sure your supporting documents are in place, and other necessary information needed.

#2. Pay off your debts

If you have other debts to your name, it is recommended that you clear them before applying for a home loan. Take your time to pay off the other debts, and you would be placing yourself in an excellent position to receive your mortgage. Of course, consulting with a mortgage broker will ease the loan repayment process for you.

#3. Save regularly

As discussed above, lack of adequate savings hampers your chances of getting a mortgage loan. To stand a better chance, you should start making regular contributions into your savings account, and this should span for at least a few months. By doing so, you would prove to your lender that you are financially disciplined enough to qualify for a mortgage loan.

#4. Job security

You shouldn’t apply for this loan when you have been at a job for less than six months. You need to demonstrate job security for the lender to take you seriously. If you are self-employed, only apply if you have 2-3 years of experience under your belt.

#5. Know your property

Before applying for a home loan, do your research, and know the current market trends and what your property is worth. This would help you set a realistic target, and the bank would know how serious you are when you put in the work.

To know you are paying a fair price for a property or being overcharged, it is best to hire the services of a mortgage broker.


Getting your home loan application approved is tough due to some conditions that people overlook. However, when you take precautions and fulfil all the necessary requirements, you stand a better chance of getting your mortgage approved.

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