I had a friend who approached me recently to get a loan and suggest a good broker. She was applying for a loan and got rejected multiple times. The first thing I told her was to stop and take a break from applying for loans as she was just making things worse for herself.
Banks often have a poor rating for people who applied for loans at many places and have been rejected, so make sure you really either get a good broker who will get you a loan with minimum tries for a loan from the right institutions and not further lend to your bad credit record by multiple applications for loans.
There are other options like a non –conforming loans that people who have been rejected for loans might qualify for. Non conforming loans assist those borrowers who do not meet standard lending criteria These loans often help a person in business who needs money, or to renovate a home or pay a tax debt.
First checkout, 7 reasons why you could be refused a home loan
1. Avoid paying bills late, where it leads to your bill being collected by collection agencies or solicitors.
2. If you have too many loans already and a low income you got very low borrowing capacity and so can be refused a loan.
3. You can increase you borrowing capacity by paying of personal loans , credit cards being paid off and cancelled, and having lower outgoing expenses
4. Don’t become bankrupt or insolvent as this will appear on your credit file and stop you from getting loans at least for a minimum period of three years.
5. Make sure when you apply for a loan that your chances of getting the loan are high, loan brokers normally know which bank has more relaxed rules compared to another bank or credit union
6. Having savings for a deposit helps you gain loan approval. Conventional lenders typically require at least a 5 percent down payment, while the minimum on FHA loans is 3.5 percent.
7. Regular employment- A steady regular employment history lends to your good record as the bank can see a regular income coming in. if you have a permanent job it adds even more to your good credit file.
8. Where you are seeking to buy your home are also sometimes factors considered for your home loan. A poor rated suburb of fire prone zone can further tighten lending criteria.
9. If you are an investor and already own other investment properties, the LVR on those properties can affect your borrowing capacity for the next loan you take.
10. Check your credit history through veda ( credit history organisation)
There is a loan that some institutions offer called the “low doc loan” which is becoming scarcer as the markets tighten up. If the banks, building societies and credit unions won’t lend to you because you’re self-employed, newly arrived in the country or have a poor credit history, consider the "low doc" loan market. These loans can be risky if the value of your property declines rapidly due to the maximum borrowing capacity (95 %) taken on these loans. These loans are also called non-conforming loans and the interest rate can be generally a little bit higher.
Check out http://www.non-conformingloans.com.au/ to get further information on non –conforming loans